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
How Much is a Status Certificate
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
- The Declaration
- 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