What Is A Status Certificate, And Why Should I Care?!
Whether you want to call it condo doc’s, building financials or status certificate.. It doesn’t matter what you call it, its IMPORTANT if you are thinking about buying a property which is part of a condominium corporation…
So whats a condominium corporation???
When you think of the word condominium, you think tall Toronto sky-scraper.. But this isn’t the case when it comes to condominium corporations.. They can range from high-rise, to low-rise, mid-rise and even in some instances.. old folks homes.
It’s essentially a property manager whose sole interest is to run a building at the utmost efficiency to protect the interest of the condo’s (term used loosely due to the wide range of properties which can be subject to a condominium corporation) owners. The property manager is appointed by the board of directors of the building, which are 99% of times owners within the building.
There are a wide variety of property management companies out there and some are definitely more reputable than others… Its important to know who is currently running your building and how long their contract is to represent the building. Often times after you buy into a building, the property managers contract expires and a new company is appointed as the property manager, this can disrupt the natural flow of a building although it tends to generally smooth itself out quickly.
So.. Now that we know who’s in charge of the condominium.. Whats a status certificate?!
This is where the competency of your lawyer comes into play. I’ve literally worked with real estate lawyers who have been so engulfed in the free-hold market (where there is no status certificate) that they literally did not know what to do with the condominium documents… This can be a stressful process on behalf of the buyer as your lawyer is paid to do a FULL status certificate break-down and review. I often times see complacency on behalf of solicitors who only take note of the reserve fund and if there are any lawsuits against the building. This is all contained on one page of the status certificate and is NOT enough to dictate if the building is in a truly healthy state.
Some key points in the status certificate will be the following..
The number of pets allowed!, I encountered an interesting scenario on this topic.. I helped a client purchase a condo at 18 Yonge St. and she had 2 dogs.. Each the size of my fist, but the condo corporation just implemented a rule about 1 dog MAX per unit.. Which the lawyer missed.. I was able to pick up this error during our conditional period.. Good thing, she would have been heartbroken if she had to get rid of pooky!
Reserve fund, This is your buildings savings account… If your building needs new windows for example.. Your reserve fund (savings account) will cover the expenditure. VERY IMPORTANT
Law suits outstanding, Law suits are a common thing with condominium corporations.. You need to ensure your building is not subject to long unresolved matters which could deteriorate your reserve fund and increase your maintenance fees drastically.
Reserve fund audit, this is when your condominium corporation contracts a third party to audit the current budget and make sure your building is on track to achieve its targets moving forward.
Condominiums by-laws, this is a set of rules laid out that all residents must adbide by.. Whether its no smoking (which was just implemented in my condo) or the number of pets you can have… It’s important to know which set of rules you are “supposed” to follow..
Operating budget, a condo corporation will also have common elements.. Some buildings will have more than others. These can vary from a parking garage, to the walkway to enter the building/complex.. To more complicated expenses such as indoor pools, party rooms, gyms and so forth. The more common elements, the higher than maintenance fee. So keep that in mind when you want that building with the huge heated Olympic sized pool… Its not free, you’re going to pay for it through your maintenance fees! The allure of an indoor pool wears off quickly.. Believe me! Although common elements are a big part of operating budget, so are utilities, staff, security, regular maintenance, fire systems and so forth. Your lawyer will need to ensure these are on target and the funds are being appropriately distributed.
Renters Vs. Owners, if you’re going to live in a building with a bunch of strangers… It’s nice to know that those stranges have a financial t in the property as well. Remember when you went to college?? Remember your first apartment you rented? Yeah, me too… Buildings with majority renters A. arent held in the same regards by potential buyers B. Can be abused based on the fact that when you rent a car, you tend to treat it a “harder” than you would your own 🙂
These are the main points of concern when it comes to condo docs although it is always suggested you find a competent solicitor to review the documents in detail and point out any points of concern, or strength.