Status Certificate Review and Your Lawyer
A status certificate is a report on the current state of a condominium corporation, prepared by the board of directors, which offers a financial snapshot of the well-being of the building and condo corporation, and information on those who run it.
When you are purchasing a condo, whether in Toronto or the GTA, obtaining the status certificate is one of the most important steps in the entire process. By reviewing the status certificate, you will be able to evaluate the financial and structural health of not only the building and its amenities, but also of the condo corporation itself. You and your realtor should obtain a status certificate before you make an offer in an Agreement of Purchase and Sale, or during the conditional period under the Agreement of Purchase and Sale. We have advised several clients that their prospective condo purchase may not be in their best interests based on our review of the condo status certificate.
This is what you should expect to see in a condo status certificate:
- Information explaining if the current unit owner is in default of paying the monthly common expenses
- Information regarding an increase in the common expenses by the condominium board
- The amount of money in the reserve fund (as a rule of thumb, generally, in Toronto or the GTA, a condominium’s reserve fund should have $1M or thereabouts)
Things that you should expect, by law, to see in a condo status certificate:
- Information regarding the common expenses for the unit
- Any special assessments that may have been levied by the condominium board
- Copies of the condominium declaration, by-laws and rules
- A current budget for the condominium corporation
- The names and addresses of directors and officers of the corporation
- Information regarding insurance
- The management contract
- Minutes of the last general meeting
- A copy of the most recent reserve fund study. This is a study that not only states the amount of money in the reserve fund, but also any financial plans of the reserve fund that are to occur within 90 days of the status certificate, including any plans to increase the reserve fund
Your Lawyer’s Role in Reviewing Status Certificates
Your lawyer’s role is to inform you, our client, of what the lawyer views as important legal matters within the transaction. We will not recommend that you proceed or not proceed with the transaction; we will provide you with an accurate legal perspective on the information disclosed in the status certificate.
Typically, as your lawyer, we will not review in detail the financial documents for the condo corporation; however, at Aura LLP, we do look at the financial picture as it relates to the status of the reserve fund and any stated or potential increases in common expenses or special assessments.
We will:
- Always complete the review in writing. You should be wear of lawyers who review status certificates over the phone or orally.
- Provide you with a written memorandum of the review by email.
- Not include any comments on matters beyond the normal scope of a lawyer’s services, such as review of the floor plan and layout, neighbourhood, school proximity, zoning, Building Code, property stigma, or any negative aspects of the neighbourhood (nude beach, drugs, criminal activity, halfway houses, residence of paroled convicts or sex offenders)
- Determine whether there is a spousal interest in the property
- Discuss with the client any intended use of or changes to the property such as a proposed change in the use of the land or proposed renovations, construction or expansion
- Advise you about your title insurance options.
At Aura LLP, we routinely review status certificates for our clients, and prepare written reports at at 50% of our standard fee when the client closes with us.
