Why is it so important to have the Status Certificate checked by your Lawyer when buying a condo?
The importance of a status certificate check cannot be overstated (original article from RECO website). In many ways, buying a condo is similar to buying a house. But there are a few additional wrinkles to a condo purchase that you should be aware of.
The condo’s status certificate is one issue all condo buyers should be aware of. What is it? Well, it’s a document that provides answers to some important questions about the unit you are interested in, and the condo corporation as a whole.
Because the info in the status certificate is so crucial, when you make an offer to purchase a condo, I strongly recommend including a condition that makes the purchase conditional on a review of the status certificate by your real estate lawyer.
As for timing, you should keep in mind that the condo corporation can take up to 10 days to provide the certificate, and a typical legal review once you’ve received it could take 3-5 more days.
Sometimes the seller will offer to provide you with a version of the status certificate that they obtained previously. While this might seem like a simple way to save some time, the information could be inaccurate and out of date. That’s why it’s always a good idea to obtain the document directly from the condo corporation.
Here are some questions that the status certificate will answer.
Declarations, Bylaws and Rules
Often condos have rules regarding pet ownership, noise, balcony furniture, decorations, and even curtains and flooring material. It’s important to make sure you’re comfortable with the rules when you buy a condo.
Know Your Fees
Before you make a purchase, you’ll want to know how much you’ll pay in monthly fees for maintenance, landscaping, utilities in common areas, and other upkeep. It’s also important to know if there are any special assessments in place that owners are still paying into. In some cases, owners can pay for a special assessment for 10 years or more, so it can be a long-term expense.
Is the seller up to date on their fees?
We’ve come across cases of buyers who bought a condo, and then were surprised to find that the seller was behind on their monthly condo fees. In these cases, as the new owner, it’s the buyer’s responsibility to catch up the arrears. It’s a situation that’s easily avoidable, because the info is on the status certificate.
Is the Condo Corp Healthy?
The status certificate will also include the financial records for the condo corporation, which can indicate whether there is enough money in the reserve fund to cover future repairs. If the reserve fund isn’t large enough, sometime in the future you could end up facing a sudden hike in your condo fees, or you might have to pay a special assessment.
Will I have full ownership of the included parking space or locker?
If you’re buying a condo with a parking space and/or a locker, the certificate will tell you whether you will personally own the space, or whether it’s a common element that the condo corporation owns, and assigns to you. When you’re reviewing the declaration documents with your lawyer, be sure to confirm that the unit number, parking space number and locker number match the numbers on the agreement of purchase and sale.
In this column, I always encourage consumers to know what they’re buying when they make a real estate purchase. Just like a home inspection can help you understand the physical condition of a home, a review of the status certificate helps condo buyers ensure they are making a purchase that suits their needs.
And what if the status certificate reveals something that gives you pause? That’s why it’s so important to include the status certificate condition in your offer. With the condition in place, you may be able keep your deposit if you decide to walk away from the deal.
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