Condominium Status Certificate

What a status certificate is

When you buy a resale condominium, you are buying two things: a unit and a share of a corporation. The unit you can see. The corporation you cannot. The status certificate is how you see it.

It is a statutory package. Anyone may request one, the corporation must provide it within a period fixed by the Condominium Act, and the fee it may charge is capped by regulation and includes taxes. It comes on a prescribed form, so every certificate in Ontario answers the same questions in the same order.

Once issued, the corporation is generally bound by what it says. If the certificate states the unit is current on its fees and it was not, the corporation ordinarily cannot come after the new owner for the arrears. That binding quality is the whole point of the document.

What is inside the package

The certificate itself is short. The attachments are where the information lives.

You get the corporation’s declaration, by-laws and rules; the current budget and the most recent audited financial statements; the reserve fund study summary and the corporation’s plan for funding it; the certificate of insurance; and any management or shared-facilities agreements.

You also get the specific answers about your unit and your building right now: the monthly common expense amount, whether the unit is in arrears, whether any increase in fees is planned, whether a special assessment has been levied or is contemplated, and whether the corporation is party to any legal proceedings.

• Common expense amount for the unit and whether it is in arrears.
• Whether the corporation is aware of any circumstance that may result in an increase in common expenses.
• Whether a special assessment has been levied or is anticipated.
• The reserve fund balance and the reserve fund study summary.
• Current budget and the most recent audited financial statements.
• Any legal proceedings the corporation is party to.
• The declaration, by-laws and rules — including pet, rental, parking and short-term-rental restrictions.
• The certificate of insurance, and what the corporation’s policy does and does not cover.

What your lawyer is actually looking for

You can read the certificate. Your lawyer reads it differently, and it is worth knowing what they are hunting for so you understand the answer when it comes back.

The first question is the reserve fund. A reserve fund is the building’s savings account for big-ticket replacements — roof, elevators, garage membrane, windows. The number on its own means nothing. What matters is the number set against the reserve fund study, which says what the building will need and when. An underfunded reserve on an ageing building is a special assessment waiting to be announced.

The second is litigation. A corporation in a construction dispute or a major insurance fight is a corporation that may be spending owners’ money for years.

The third is the rules, read against how you actually intend to live. Pet restrictions, rental restrictions, parking and locker rights, whether the balcony is exclusive-use common element rather than yours, and whether short-term rentals are permitted. People find out about these after closing far too often.

The fourth is arrears and insurance — whether the seller is behind, and whether the corporation’s coverage leaves a gap you need to fill with your own policy.

• Reserve fund balance measured against the reserve fund study, not in isolation.
• Any special assessment levied, planned or hinted at.
• Litigation the corporation is involved in.
• Rules that conflict with how you plan to live — pets, rentals, parking, storage.
• Arrears on the unit, and any lien registered against it.
• The insurance certificate, its deductible, and what an owner is expected to carry.
• The management agreement and any shared-facilities agreement with a neighbouring building.

Why the condition in your offer matters

In a resale condominium purchase the normal protection is a condition: the offer is conditional on your lawyer reviewing the status certificate and finding it satisfactory. If the certificate shows something you cannot live with, you walk, and your deposit comes back.

The condition has to be long enough to work. The corporation has a statutory period to deliver the certificate after the request and the fee are received, and your lawyer then needs real time to read several hundred pages of attachments. A condition period that ignores the delivery period is a condition period that expires before the document arrives.

In a competitive market buyers are pushed to drop this condition. Understand plainly what that means: you are agreeing to buy a share of a corporation whose finances you have not seen. Sometimes a certificate can be obtained before the offer goes in — a well-run listing may already have one, or the seller can order it in advance. That is the better way to compete without going blind.

• Build the corporation’s statutory delivery period into the condition period, then add review time on top.
• Ask the listing agent whether a current certificate already exists before writing.
• A certificate is a snapshot; a very old one may no longer reflect the corporation’s position.
• Waiving the condition means accepting the building’s finances unseen.

Pre-construction condominiums work differently

There is no status certificate for a brand new condominium, because the corporation does not exist yet and has no financial history.

Instead the developer must give you a disclosure statement and Ontario’s residential condominium buyers’ guide, and you have a statutory cooling-off period after receiving the fully signed agreement and those documents in which you may cancel outright.

That cooling-off period is the pre-construction equivalent of the status certificate condition, and it is short. Get the disclosure statement to a lawyer the day you receive it, not at the end of the week.

Practical notes

Order early. The delivery clock only starts when the corporation has both the request and the payment, and management companies do not hurry. Many offer a rush service for an extra fee, which is unregulated and can be expensive.

Read the attachments, not just the two-page certificate. The certificate says what the corporation is legally required to say. The financial statements and the reserve fund study say what is actually happening.

• The fee a corporation may charge for a certificate is capped by regulation, including taxes.
• The delivery period begins on receipt of both the request and the fee.
• Rush delivery, where offered, is a private service outside the regulated fee.
• The status certificate form is prescribed and administered through Ontario’s condominium authority.