A typical Agreement of Purchase and Sale of a condominium should include a provision that the offer be conditional upon the review of the status certificate by the buyer’s lawyer.
The status certificate should never be overlooked - even during competitive bidding where buyers feel the pressure to bid with “clean offers” with no conditions. The buyer’s sales representative can inquire if the status has been ordered and if so, obtain a copy for the buyer to give to their lawyer for a “pre-offer review” - usually for a nominal fee.
A status certificate is a document that contains vital information about a condo corporation’s financial and legal health including the budget, common expenses, any legal proceedings, insurance status, pending major repairs or maintenance issues and the reserve fund.
Certificates also allow prospective buyers to learn about the rules such as whether pets are allowed - which is often a very important factor for many of our pet owner clients!
Things that are of immediate interest in the certificate are confirmation that the maintenance fees for the specific unit have been paid up to date, that there are no pending Special Assessments, and that there are no pending orders to reverse unauthorized modifications made to the unit by the current owner. Regarding the latter, some Corporations require a walk-through to check for unauthorized modifications. If such are found, it is the responsibility of the titled owner to reverse the changes. Some certificates may indicate where changes have been approved, while others may not and it is up to the buyer to satisfy themselves in this respect.
An important factor to potential buyers is the amount of money that the Corporation has in its Reserve Fund to deal with anticipated repairs and improvements. Reserve Fund studies are mandated to be conducted every 3 years and it is important the certificate is up to date in this respect. The budget addresses current maintenance and capital improvements and the anticipated impact on maintenance fees in future years. Another important factor is whether the Corporation is involved in any legal actions that could impact the financial position of the Corporation and result in increased fees and assessments.
Many older condos do not have separate hydro billing capability and maintenance fees may cover all utility costs. Beyond hydro, maintenance fees often include heat, A/C and water and parking. However; sometimes utilities are metered separately, particularly in townhouse condos. It is important to know whether parking and lockers associated with the unit are owned or assigned. If they are assigned, it precludes the ability of the owner to sell a parking space. Owned parking spaces and lockers are indicated individually on title.
Hydro utility costs can often be confusing. For example, a unit may have heat and A/C included in the maintenance costs, but not hydro. Buyers often miss the fact that although the condo provides heating and cooling, the unit’s HVAC fan(s) distribute the heat/cool, and the electricity used by the fan(s) is part of the units separate metered services, along with lighting, appliances, TVs, computers, etc.
Some things may not be well defined in the certificate and require additional research, such as the distribution of responsibilities for windows, HVAC, and hot water tanks repair and replacement. Some Corporations will maintain and change HVAC filters, but it the system requires replacement, it is the unit owner’s responsibility. Townhome owners are often faced with additional considerations, such as snow removal and who is responsible for clearing driveways and walkways. Common elements may include exclusive outdoor areas and it is important to note if the owner can modify those areas; installing fencing, plantings, decks, etc. Some condos are very restrictive in this regard.
Rules and regulations are important for things such as whether bbq’s are allowed on balconies, and as mentioned earlier, pets. Many owners don’t realize that the Corporation has the ability to order removal of a troublesome animal. Some condos may have lifestyle restrictions, such as no smoking on condo property and an absolute ban on marijuana. Some condos with limited visitor parking may restrict the number of monthly visitor passes.
If a buyer is considering renting out their unit they may find restrictions on the number of units that can be leased at a given time and are likely to find that Airbnb’s (short term rentals) are not permitted at all. Rules may require Board approval of a renter and there is often a rule that precludes the renter from subletting the lease.
It is important for a potential buyer to read all of the rules carefully in order to make an informed condo buying decision.
For more information, please contact us directly.
Nancy 416-985-1486
Dave 416-894-4079
info@gtaselling.com
