What Condo Buyers Need To Know About Status Certificates
Planning on buying a condo?
Before you sign on the dotted line, you’ll want to pull together a status certificate to ensure the condo you’re investing in is worth it.
What Is A Status Certificate?
Once referred to as an “Estoppel,” a status certificate is a document that reports on the health of a condominium corporation. Basically, it offers buyers and owners a detailed idea about the condo’s financial and legal status. It also includes a rundown on the entities that oversee the corporation.
A status certificate is governed by the Ontario Condominium Act and is usually part of a package. To get a copy of a condo’s status certificate, you’ll need to order it in writing and pay an upfront fee of about $100. You should receive a copy of the package within 10 business days, though you may be able to get it sooner.
When you put in an offer on a condo, you’ll want to include a few key conditions. A review of the status certificate is one of them. This will give you a chance to pull the report and have your lawyer review it to make sure everything is as it should be.
What’s So Important About A Status Certificate?
Since you’re only buying a unit in a building owned by someone else, you should find out how it is managed. This will directly affect not only your enjoyment of the property but your finances too.
Here some important pieces of information that you’ll want to look at before committing to the purchase of a condo.
If there is any legal action against the condo, the status certificate package will reveal it. Ideally, you’ll want a condo that is not in the middle of any legal issues, as this could end up costing you and all other owners.
If you plan on buying as an investment, consider the fact that a condo with pending lawsuits is a tough sell since buyers typically want nothing to do with such issues.
The status certificate will outline common expenses so you’ll know how much you’re required to pay monthly. Condo fees cover things like common elements, utilities, and insurance.
The certificate also tells you how much money is in the reserve fund. A reserve fund study takes place every three years to determine if/when major repairs must be done, and whether there is enough money in the reserve fund to cover these costs.
If there is an issue with the building and the reserve fund doesn’t have enough capital to cover it, owners are obligated to cover the costs.
The financial statements will detail the current year’s budget, expenditures, and receipts, all of which will give you a good idea of how financially healthy the condominium is.
While you’ll be responsible for getting your own insurance policy the condo corporation is responsible for covering the complex itself. Condominium association insurance provides different types of coverage in its association master policy, so you’ll want to identify the exact type of coverage that the building has before you decide to buy your own.
This outlines the building’s by-laws and rules, which directly impact how you can use your unit and building.
Condo Corporation’s Management
You want to make sure that whoever is running the show is doing a good job. A poorly run condominium can be a nightmare for those who own and live in the complex. These folks make sure there’s enough money in the pot to pay for maintenance and repairs, they maintain common elements, and address owner issues.
Whether you plan to use the condo as your primary residence or intend to rent it out, you’ll want to know the building’s owner to renter ratio. The status certificate will have this information.
Status certificates also detail the rules that govern the maximum number of tenants permitted in the building and whether or not renting is even allowed.
As you can see, a status certificate contains plenty of crucial pieces of information that you’ll definitely want to find out before you decide whether or not a specific condo is for you.