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  • Natalia Werhun-Popowicz

Buying a Condo - What is a status certificate and why is it important?

Condominium properties come in various forms and encompass a number of properties - for instance, the  standard condominium units in high rise buildings which we tend to be most familiar with, especially if you live in Toronto,  townhouse condominiums, and  even properties that consist of detached homes but are actually part of a common element condominium or “parcel of tied land”, as well as vacant land condominiums, which are less common.


Often times, we find that new buyers who are not familiar with condominium properties perceive the condo corporation as a landlord or some third entity which has no bearing on their ownership, but it is important to keep in mind that when buying a property that is part of a condominium, you are ultimately buying into a portion of the condominium and are responsible for your proportionate share of expenses and contributions,  meaning  that if any issues arise,  this could have a very real impact on your investment, including your ability to pay increased monthly fees or special assessments, or your ability to resell the property, as prospective purchasers may be reluctant to take on the pre-existing issues.


Regardless of the type of condominium property you are purchasing, you should be obtaining and reviewing the status certificate issued by the condominium corporation in every case.


What is a status certificate?


A status certificate is an official document signed off on by the board of a condominium corporation and confirms items such as but not limited to: the legal description of the units; that all of the units you are purchasing, including  any parking and locker units, belong to the seller, and whether these are owned outright or belong to the condominium corporation but assigned for the exclusive use of the seller; that the monthly condo fees are the same as represented to you by the seller and that there are no outstanding condo fees (which you would become responsible for as the new owner if not dealt with by the seller before closing); whether any special assessments have been levied or are being contemplated against unit owners; whether the condo corporation has any reason to believe that there may be an increase in the monthly condo fees; whether the condo corporation has adequate insurance in place; the latest budget and financial statements which disclose the financial position of the corporation; the latest reserve fund study and whether the condo corporation has set aside sufficient funds for major repairs that may come up over time; and whether the condo is involved in any pending litigation, such as slip and fall claims, which could ultimately lead to special assessments or increases in condo fees.


Many times, we find that there is a misperception that the status certificate only consists of “Form 13” and that the remaining documents are simply standard ‘legalese’ that can be skimmed through or not reviewed altogether. However, the remaining documents contain information which can materially impact your decision to purchase the particular property. For example, there could be restrictions on the number, types and weight of pets allowed. There could also be height restrictions or other limitations with respect to the parking garage making it not possible for you to park your particular vehicle in the parking unit you are purchasing. Many condominium properties have a stipulation that units can only be used as single-family residences, which can be problematic if you are purchasing the property for investment purposes and are planning on renting it out to multiple tenants who are not from the same family (ie. students). There may also be other requirements for leasing or renting out of units, such as no short-term rentals being permitted, which may not be in line with your plans for the property. The documents may also refer to upcoming unexpected renovations which can affect your bottom line, such as replacement of KITEC plumbing systems, or we have even seen reference to prior asbestos inspections and remediations buried in the documents. Lately, we have also been seeing references to Covid-19 and that there could be an impact on the financials of condo corporations as a result of the increased safety measures that condos have had to undertake.


For these reasons, when purchasing a condo property, it is crucial that the status certificate be obtained and reviewed, and not just by you or your realtor, but by your lawyer. Ideally, and this was common practice for some time, as a buyer, you want to make your offer (Agreement of Purchase and Sale) conditional on review of the status certificate and enclosures by your lawyer. However, with the market being as competitive as it is in the GTA, firm offers without any conditions are not uncommon. In these situations, the status certificate may be made available to prospective buyers before offers are submitted. Due to the tight timelines and competitiveness in the market, buyers not wanting to waste any time in submitting an offer, may simply look through the documents on their own and decide to proceed on this basis. The risk, however, is that once the deal is firm, there will be little or no recourse for the buyer if an issue subsequently comes to light which was disclosed by the status certificate and which would have been discovered if the status certificate was adequately reviewed. …And what could be even more problematic, if you are obtaining a mortgage, the lawyer acting for you on the purchase will also be retained by your lender to act on their behalf, meaning that the lawyer will ultimately be required to review an up-to-date status certificate and report any issues to your lender, as well as the title insurer which will be issuing the lender’s title insurance policy (which lenders now require in almost every instance). This could jeopardize your ability to obtain financing shortly before closing (as typically, the mortgage instructions are provided by the lender to the lawyer only about two weeks or so before closing if not less than this), or it may cause the title insurer to insert exceptions into the title insurance policy, which even if you may be willing to accept the exceptions in the owner’s policy, your lender may not be willing to accept in their lender’s policy. Further, most lenders and title insurers have specific requirements as to how many days prior to closing the status certificate can be issued, meaning that if the status certificate you were originally provided was issued some time ago, and you were not aware of these timeframes when you reviewed the status certificate yourself at the time that the offer was submitted, your lawyer will be required to obtain and review a more up-to-date status certificate prior to closing.


When including the condition and deciding on the timeframe by which the condition must be fulfilled, be mindful of the fact that under the Ontario Condominium Act, the condominium corporation has up to 10 days from receiving the request and the prescribed fee to issue the certificate. You also want to make sure that your lawyer has sufficient time to review all of the documents and report to you. It is not uncommon for us to now see 1-2 days for lawyer review, which simply is not sufficient time, keeping in mind that the package is usually hundreds of pages long. You want to ensure that your lawyer has adequate time to review the documents thoroughly. Even more so, it is important to keep in mind that if an issue is discovered which you may need to clarify with the condominium corporation or confirm with your lender that it will not impact financing, this can take several days. We find that often times, this is a consideration which is overlooked when setting a timeframe for the status certificate condition.


At Werhun Law, we can assist you with your condominium purchase and in ensuring that you have the information that you need to make a thoughtful and well-informed purchase which suits your particular requirements and plans for the property.


Werhun Law is a law firm located in Etobicoke serving the Greater Toronto Area. Werhun Law provides services primarily in residential and commercial real estate, mortgages, commercial leasing, and wills and estates. If you have any questions or are in need of legal services you can contact us at info@werhunlaw.com.


The information in this post is for general informational purposes only. It does not constitute legal advice and does not create a solicitor-client relationship.

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