When buying a resale condominium unit, a status certificate or estoppel certificate is an important document issued by the condominium corporation to the buyer. This allows for the buyer to determine the financial and legal details and circumstances of the condominium unit being purchased as well as the building. It also assists with the determination of mortgage financing for the buyer. In order for the status or estoppel certificate to be effectively assessed by the purchaser it must provide an up to date overview of the condominium unit as well as the condominium corporations financial status as it stands at the date of issuance. In many cases the Status Certificate is issued by the Property Manager or Property Management Firm on behalf of the Condominium Corporation and Unit Owner. It must be provided by the Condominium Corporation within a period of 10 days from the date the request is made. As per the Condominium Act a fee of $100 CAD may be charged for the Status or Estoppel Certificate.
The status or estoppel certificate is required to contain important information about the individual condominium unit as well as the condominium corporation. The Certificate contains information regarding whether the current owner of the Condominium Unit is in any default of common expenses, and/or if there has been any declaration of increase in common expenses by the Condominium Board. It also includes information relating to the amount of money held in the reserve fund by a condominium corporation.
Provisions of the Condominium Act contain a list of information which must be included in a status or estoppel certificate. The required information includes
- Name, Address of Directors and Officers of the Condominium Corporation;
- Information relating to the Common Expenses of the Condominium Unit.
- Information relating to a declaration of Special Assessments made by the Condominium Board.
- Information relating to the Property Management Contract in place.
- Information relating to the Insurance policy(ies) in place.
- Information regarded the minutes of the latest general meeting.
- Information and copies of the Condominium Declaration, by-laws, rules; and
- The latest reserve fund study, which must contain information regarding the amount of money held in the reserve fund at the moment, as well as the amount of money held within 90 days of the issuing of the status certificate and whether there are any expected increases to the reserve fund.
The Status or Estoppel Certificate is also expected to contain information regarding the existence of any legal issues or lawsuits against the previous owner of the condominium unit (in relation to the unit) or the Condominium Corporation. Such information helps determine whether the Condominium Corporation has any standing judgments against is or is undergoing or party to any ongoing litigation.
Any additional legal issues that may affect the condominium will also be included in the status certificate. For example, the certificate should state whether there are any judgments against the corporation, and if the condominium corporation is a party to any litigation already underway. If a legal action has not been commenced, the status certificate may be silent on this matter. Alternatively, however it should be noted that matter undergoing mediation and/or arbitration are not considered legal action per say and may not be included in the status certificate under this section. However, since such matters still have associated costs the declaration of special assessments should be analysed in order to determine if any alternative dispute management is taking place.
Why Should I Get A Status Certificate?
The status or estoppel certificate allows for the buyer to determine the financial and legal details and circumstances of the condominium unit being purchased as well as the building and/or Condominium Corporation. It also assists with the determination of mortgage financing for the buyer.
The status certificate is the one document that will give prospective buyers details of the financial and legal circumstances of both the condominium building and the unit they are interested in. A status certificate is also an important document for those lending monies to finance the condominium unit.
In almost all cases, buyers and lenders will order a status certificate as it will disclose additional or unanticipated liabilities. In fact, many prudent vendors will also order a status certificate when they list their unit. By doing this, they have it readily available to give to a purchaser who is keenly interested in the unit. Although it will have to be updated to assure the purchaser that there are no changes since the time of the issuing of the status certificate, much of the information will remain the same and is available to help the purchaser make a faster decision.
As mentioned, a status certificate will include information regarding increases in the common expenses and if the building is being sued, as well any large expenditures for repairs. A buyer should pay attention to the reserve fund of the condominium corporation and ensure that there are sufficient funds to cover any ongoing maintenance and repair of the condominium’s major capital items. To do this, the Agreement of Purchase and Sale should be conditional on the purchaser receiving a status certificate, having a few days to review it, and being satisfied with its contents.
Often, the issues and language contained in a status certificate can be complex. It is advisable, therefore, to obtain the assistance of a real estate lawyer and an accountant to determine the potential legal and financial consequences.
For more information please contact one of our experienced Real Estate Lawyers at MEHDI AU LLP.
Disclaimer: Use of this site and sending or receiving information through it does not establish a solicitor / client relationship. The views expressed and the content provided on this blog is for non-profit educational purposes. It is not, and is not intended to be, legal advice on any specific set of facts. The use of this website does not create a solicitor-client (attorney-client) relationship. If you require legal advice, you should contact a lawyer directly.Back