The Importance of Status Certificates when Purchasing Condominiums
When buying a condominium, especially a resale condominium it is extremely important that you have a lawyer to review the status certificate to ensure that you are purchasing the condominium with as much information about the condominium corporation, it’s financial information, common expenses, budget, reserve fund and along with other important information included in the certificate, declaration, rules and regulations of the condominium.
What is a Status Certificate?
A Status Certificate provides a snap shot of the unit a prospective buyer is purchasing. As per section 76 of the Condominium Act, a status certificate should provide basic information concerning the financial status of the unit and condominium corporation.
The main reason why it is important to review the status certificate is to inform prospective buyers of the common expenses fees. It is important to remember that these fees are calculated on top of and in addition to any monthly mortgage payment the new buyers will pay.
The status certificate will reveal if the current owner is in arrears for non-payment of common expenses, it will also inform prospective buyers if there will be an increase in the common expenses.
When it comes to reviewing the condominium corporation’s budget it is important to look for the following information:
- Is the condominium corporation meeting it’s financial obligations and do they have up to date annual audited financial statements;
- Are there any special assessments passed to the unit owners;
- Is there a statement of unpaid condominium fees on the unit;
- Will the common expenses increase or have they increased since the date of the budget.
Condominium corporations to pay for the replacement of each building component commonly use a reserve fund. A portion of the monthly common element fees paid by the unit owners is deposited into the fund.
It is important to review what is the balance of the reserve fund at the time the certificate is issued. More importantly, does the balance of the reserve fund exceed the anticipated expenditures to be made and are there any plans to increase the reserve fund, which could increase the common element fees for prospective buyers.
The condominium corporation may be subject to legal proceedings and might have judgments against it. These judgments might be divided among the unit owners resulting in a special assessment fee.
Leasing of Units
It is not uncommon for people to buy condominiums and rent them out. However, prospective buyers should be aware of how many units are being leased. The higher the number of leased units could result in higher common element fees in the future due to an increase in damages in units and to the condominium building resulting in higher rate of repairs.
In addition to reviewing the certificate a lawyer should review the condominium’s declarations, rules and regulations regarding pets, noise levels, visitors, parking and renovations.
Call Kesarwani Law Office today and let us advise and review your status certificate. We service across the GTA, including Mississauga, Brampton, Vaughan, and Oakville.
Contact Jasdeep Dhillon at 647-349-8300 or at email@example.com
Please do not construe this as legal advice and contact a lawyer before making arrangements for reviewing status certificates.