6 Critical Things To Determine Prior to Offering on a Toronto Condominium.

status certificate

Typically, in a normal market, you would make your condominium offer conditional upon status certificate review by a lawyer. However, given our current Toronto market conditions with bidding wars, any condition on your offer can kill the deal. It is common in this market, for the listing agents to pre-order the status certificate and there are some things you can pre determine on your own or with your realtor, prior to putting in an offer.  

A status certificate contains pertinent information about the individual condominium unit. Among other things, the certificate would indicate if the current unit owner is in default of paying the monthly common expenses, if an increase in the common expenses has been declared by the condominium board, and the amount in the reserve fund (the pot of money that contains the monthly maintenance fees/common expenses from each unit owner).

The status certificate should contain:

  • the names and addresses of directors and officers of the corporation,
  • information regarding common expenses for the unit,
  • any special assessments that may have been levied by the condominium board,
  • management contract,
  • insurance,
  • minutes of the last general meeting,
  • copies of the condominium declaration, by-laws and rules,
  • a current budget for the condominium corporation, and
  • a copy of the most recent reserve fund study. The study should state the amount in the reserve fund, within 90 days of the date of the status certificate, and any plans to increase the reserve fund.

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.

Here are the 6 critical items to review on the status certificate prior to making a purchase decision.

1. Have units sold and closed in this building in the last 3-4 months?

If units are selling and closing, it means that other lawyers and lenders have approved the

building, and that CMHC most likely has not refused to lend on the property, which has

occurred many times when concerns have been raised. This should give you some comfort

that all is in order in the building.

2. What is the condominium corporation number?

Condominiums are registered in numerical order, with the first buildings being registered

about 50 years ago. There are approximately 2700 condominium corporations in the Toronto

area. That means if you are number 2400, your building is likely 2-3 years’ old. If it is

number 1500, then it is likely 12-15 years’ old. If it is number 200, then it is closer to 45

years’ old. This can give you some clues as to when the roof may need to be repaired and

whether there is enough money in the reserve fund for major repairs that may be required.

For example, a roof may need to be replaced every 20-25 years. This is the major expense for

most townhouse projects.

3. Who is the property manager?

When the property manager is a familiar name, there is comfort that the condominium board

is being given the correct advice in how to properly maintain the building now and in the

future. If you hear names such as Brookfield, First Service or Dell, this is typically a positive

attribute for the corporation.

4. Does the reserve fund match the reserve fund study

The reserve fund study should be updated every 3 years. Be suspicious if there is no current

one. The amount in the reserve fund today should be similar to the amount that was projected

in the last reserve fund study. If there is a shortfall, then do the following calculation. If there

are 100 units in the building, it is likely your unit is 1% of the expenses. That means if the

reserve fund is short 1 million dollars, your unit share would be $10,000.00. If there are 200

units, your share is one half a percent or $5,000.00. This is likely your worst case scenario.

Just adjust your purchase price accordingly. You can do the same math if you need to cost a

special assessment or lawsuit affecting the building.

5. Is AirBNB permitted?

The status certificate will tell you how many units are leased to tenants. Many buildings

have minimum lease periods of 6 months to 1 year, which would prohibit Air BNB. More

and more condominiums are trying to prevent this, due to security and insurance issues.

6. Pets and Parking

Make sure you understand in advance whether pets are permitted at all in the building or

whether there are weight restrictions on pets that are permitted. There is no point wasting

time on buildings where the buyer has a pet that will not be permitted. Make sure you

physically see the parking space and the locker before signing any offer, so that there is

no confusion with what you expect to receive on closing. It is possible that the number on

the floor may not be the same as the legal unit number. That can be determined by just

asking the property manager for details.

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