By: Cheri Mistry
An Agreement of Purchase and Sale for a Condominium will typically be conditional on the review of a status certificate by the buyer’s lawyer. Every purchaser or their realtor should make certain that this condition is included in the Agreement. The condition should only be waived once the purchaser’s solicitor has had an opportunity to review the status certificate in its entirety.
A status certificate is a legal document that provides the status (both unit specific and general) of the condominium corporation in which a purchaser wishes to buy a unit. Under section 76 (1) of the Condominium Act, the condominium corporation is required to give to every person who so requests, in the prescribed form, a status certificate with respect to a unit in the condominium corporation. Among other things, the document will disclose whether the unit is in arrears in the payment of maintenance fees, whether there are any legal proceeding against the condominium corporation, if there are any special assessments levied against the unit or any major repairs that need to be undertaken. These are all important details that a prospective buyer should know. Furthermore, any prospective lender will need to be informed of any information that may be disclosed in the status certificate that could impact their decision to lend.
The document will also reveal any expectancy of the common expenses increasing due to special assessments, inadequacy of the reserve fund or for budgetary reasons. A buyer’s lawyer will explain these details to the buyer which will play an important role in whether or not the buyer wishes to go ahead with the purchase.
The status certificate package will also include the condominium corporation’s financial statements, declaration and by-laws. The financial statements give a good indication of the condominium corporation’s financial position. The by-laws’ purpose is to complement what is missing or is not specific enough in the declaration. The declaration will typically consist of the rules and regulations, unit boundaries, what portions of the common elements are “exclusive use” and other such information. Declarations unfortunately are very difficult to understand and are written in legalese. As such, a real estate lawyer will be able to simplify pertinent sections of the declaration to explain to the buyer. Declarations can also put certain restrictions on unit owners (examples include types and number of pets, use of the unit for business, etc.) that may impact a buyer’s decision to purchase the unit, and an experienced real estate lawyer should know where to look for such restrictions.
The status certificate is an important document that every purchaser should ask their lawyer to review before entering into a firm Agreement of Purchase and Sale of a condominium unit, in order to ensure they are aware of all information required by them to make an informed purchase.