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Advice For Buyers

Apr 17
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What is a Status Certificate and WHY are they important to review before buying a condo?

By Advice For Buyers, Video Blog

One of the most important parts of the condo buying process, is reviewing the corporations Status Certificate! 

What is A Status Certificate?

A status certificate is a collection of documents, issued by a condominiums property manager that contains info on:

  • Contact information – lists out the legal name of the Condo Corporation, Property Management, and Board of Directors.
  • Maintenance fee amount (Expenses) – both at time of issue and if there are any plans to increase in the near future.
  • Budget – what the building is spending its monthly maintenance fees on.
  • Reserve Fund – how much they have saved for the repair and replacement of components in a condo (ie. savings for roof repairs, parking garages, upgrades, etc)
  • Legal Proceedings/Claims – if any lawsuits are levied against the corporation, or if the corp has levied any against others.
  • Leasing of Units – how many units are currently tenanted in the building
  • Notices – announcements of maintenance fee increases, any planned repairs, or other factors that may impact maintenance fees
  • Bylaws and Rules – The bylaws and rules list what you can or can’t do in a building…Some buildings in the city have outright bans on pets or restrictions on certain breeds and weights.
  • Insurance Requirements – policies the corp has in place, and requirements for new purchasers to have.

How Order a Status Certificate

A seller can request a status certificate by contacting the buildings property manager.  The management company will have 10 business days to prepare and can deliver it in either hard copy or in digital via email. 

How Much is a Status Certificate

The certificate will cost $100 + HST and can be paid by either the buyer or seller, depending on how a deal is structured.

Why You Must Request a Status Certificate

Sellers – I often suggest ordering one before you even go to market with your property.  As a seller, you have a duty and responsibility to disclose any and all details that could impact the sale of your condo.  By ordering a status in advance, you’ll be made well aware any potential pitfalls and can disclose these issues to potential purchasers ahead of time to avoid any issues with closing.

Buyers – In a condo, values are closely tied to how well the building is run (second to location of course).  If fees skyrocket, you may find that the buildings value will appreciate much slower (or actually depreciate) than a building with lower maintenance fees.  A building with known problems can also have an impact on financing and insurance resulting in higher monthly costs – knowing this in advance can allow you to negotiate a better price, or walk away from the deal all together!

Who Reviews the Status Certificate

It is crucial, you take it to a Real Estate Lawyer who has experience in condo dealings.  They are trained in knowing what to look for and the right questions to ask. DO NOT take it to general law firm, or rely solely on a realtors review of it!

How Long Do you Have to Review a Status Certificate 

Most clauses generally allow 2-3 days for lawyer review.  It’s a small window of time, so it’s best have a candid conversation with your lawyer in advance and tell them exactly how you plan on using the property. 

A common misstep is with buyers who spends months out of country.  If their plan is to rent it on AirBnB while away, it’s best to make sure there aren’t any rules or bylaws preventing you from doing so!

Remember, a Status Certificate is generally valid for only 90 days – so if a seller produces a Status dated older than 90 days, ensure you request a new one.

When Should You Walk Away From Purchasing a Condo

No matter how in love you’ve fallen with your new purchase – there are a number of reasons you may want to walk once the status certificate is reviewed: 

  • If the corporation has a low reserve fund – with no plans of replenishing
  • Lawsuits that could result in a loss to the building
  • Indications of an increase to monthly fees or large repairs
  • Being blacklisted from lenders or insurance companies

Accompanying Documents That Also Come With a Status Certificate

Other important documents that accompany the status include:
  • The Declaration
  • Bylaws
  • Rules and Regulations,
  • Certificate of Insurance
  • Current Budget
  • Reserve Fund Study
  • Management Agreements
  • Financial Statements
  • New Owner Information
  • Move-in and Out forms
  • Other Building forms

 

Feb 07
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Modern house with garden swimming pool and wooden deck

There Needs To Be More Transparency with Real Estate Bidding Wars

By Advice For Buyers, Advice For Sellers, Video Blog

We need to change the bidding war process in Toronto! If you’ve tried to buy a home in recent years, you know how backwards the current process is…If you haven’t, let me explain.

The Current System

A seller will list their property below market values to create a frenzy amongst buyers.  After roughly 7 days of market exposure, they’ll review and all offers that come to the table.  The problem is that each buyer is going in “blind” not knowing anything about the other offers.

Current rules, as set by the Real Estate and Business Broker Act, say we can not disclose the motivation, offer, or price of a competing offer. Thus creating a blind bidding system full of suspicion and mistrust.

The winning buyer always feels like they paid too much, the losing buyers feel like they could have paid a bit more and the sellers could regret the highest bid if the winning buyer can’t secure the financing. Plus it artificially increases values as going in blind can create an over inflated offer.

How We Can Fix It

Simple – get rid of the blind bid system and open up the process. Let each party know the Price, Deposit and Closing date of the other offers. This levels the playing field. There still will only be one winner and several losers, but atlas both parties would fairly know what they were up against, in a more transparent system and enjoyable process.

Good News

OREA is seeking feedback on whether it should push the provincial government into modernizing the real estate industry to make it more transparent. Australia is already doing this – and even opening up their MLS to sold prices (more on that in another video). In Melbourne, they littering gather infront of the house on a offer day and each party bids infront of each other. This is the most transparent way to know what you’re up against.

Oct 24
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How Will the B-20 Mortgage Guidelines Impact Your Purchase?

By Advice For Buyers, Video Blog

For the second time this year, new guidelines are being introduced that will impact how Canadians get approved for a mortgage… and for the second time this year, a lot of people are confused by what these changes mean! I’ve put together a short video to better explain who IS and ISN’T affected by it, and what it all means.


 

10 Ways The New Changes May Impact You

  1. The new guidelines would introduce “STRESS TESTS” for all purchasers taking out a mortgage with MORE than 20% of a downpayment.
  2. If you’re putting LESS than 20% down, taking a VARIABLE mortgage, or a term of less than 5 years – you’re already subject to qualifying under a stress test. No change to this segment of the market.
  3. If you’re putting down MORE than 20% – you too will also be subject to the test.
  4. The guidelines will require purchasers with more than 20% down to qualify at the Bank of Canada Rate OR the Contract Rate + 2% (which ever is higher)
  5. For Example: Say the banks are offering you a 3% fixed rate for 5 years.  In order to be approved for it, you must actually qualify at 5% (3%+2%).  
  6. Because purchasers are qualifying at a higher rate, many will see their max budget amount reduced by roughly 15-20%
  7. The new guideline ONLY apply to those lenders that are deemed a Federally Regulated Financial Institution (currently 85 in Canada).
  8. Those that don’t fall under Federal Regulations are not subject to the new guidelines.  The most popular alternative is CREDIT UNIONS like Duca or Meridian… although there is some discussion that they may adopt similar measures to the B-20 Guidelines. 
  9. Although many will see their MAX budget reduced – it’s important to remember that NOT EVERYONE wants to spend the max a lender can make available for them.  I know of many clients who chooser to only spend 60, 70 or even 80% of their max budget on a purchase.
  10. Like all changes in the market, there will be an adjustment period of probably 4-6 months for people to adjust to the changes.

More Reading:

Final Revised Guideline B-20: Residential Mortgage Underwriting Practices and Procedures

Canada’s banking watchdog sets tougher rules for mortgage lending

New mortgage stress test to hit ‘move-up’ home buyers