What to Look for in a Status Certificate

By: Jayson Schwarz LLM

If you are a prospective purchaser of a condominium under here are the basic things to look for when you review the Status Certificate:

Common Expenses

Condominiums are subject to common element fees which include things like maintenance, insurance, common element operational expenses, bulk water, gas and hydro as applicable, etc. Look for the following:

• How much are the common element fees for the unit and is this an amount you are prepared to spend each month on top of your mortgage payments?
• What do the common element fees actually cover?
• Is the current unit owner in arrears for non-payment of common expenses;
• Is there or will be an increase in the common expenses in the current fiscal year;

Budget

Although the Condominium Corporation cannot comment on or may not be able to accurately determine whether there will be a surplus or deficit for the fiscal year at the time the Status Certificate is issued, and it has no control over increases in utility rates, labour and material costs, Look for the Following:

• Is the condo corporation meeting its financial obligations;
• Are there any special assessments which have been passed on to the unit owners;
• Is there a statement of unpaid condominium fees on the unit;
• Are the property taxes for the unit and the corporation paid to date and if not is the unit going to be subject to a special assessment;
• Will the common expenses increase or have they increased since the date of the budget?

Reserve Fund

• The reserve fund is in place to pay for the replacement of each building component and a portion of the monthly common element fees paid by the unit owners is deposited into the reserve fund. Reserve fund studies, which are the responsibility of the condominium corporation, evaluates the projected replacement costs, show the trends in expenditures and receipts for previous years and provide comparisons of a corporation’s actual and expected costs. The budget for the current year will also be included, identifying both the income to the corporation, and the amount of the reserve fund. What to look for:
•  the balance in the reserve fund;
• does the balance of the reserve fund exceed the anticipated expenditures to be made in the current fiscal year;
• Does the board anticipate the reserve fund will be adequate in the current year for the expected costs of major repairs and the replacement of common elements and assets of the Corporation?
• Has there been a Reserve Fund Study done or is one scheduled;
• Look at the Contribution Table to assess whether the contributions being made to the reserve fund each year is being implemented
• Are there any plans to increase the reserve fund, which could increase your common element fees?
• If there is an inadequacy in the reserve fund study and what is being proposed to remedy this?

Legal Proceedings and Claims

The Condominium Corporation may be subject to legal proceedings and might have judgements against it. These judgements might be divided among the unit owners resulting in a special assessment fee. What to look for:

• Are there any outstanding judgement against the Condominium Corporation
• Has an inspector or administrator been appointed by the Superior Court of Justice?
• Does the Condominium Corporation’s insurance policy cover these claims or will this affect the common element fees or cause a special assessment?

Agreements with Owners Relating to Common Elements

Unless an Owner has Board consent any change to the common element portion of a unit, an Owner can be made to restore the common element to its original condition. If agreements exist you need to review them. Look for the following when inspecting your purchase, especially when it is a townhouse condominium:

• Additions to the unit which differ from other units in the building or complex;
• Structural changes of fences; enclosures or anything else which does not follow in the same way as other units;
• Anything that stands out and grabs your attention should be inquired about.

Leasing of Units

It is not uncommon for people to buy condominiums as investment properties and to rent them out but you should be aware of how many units are being leased during the fiscal year preceding the date of your status certificate. What to look for:

• details of any management and lease agreements on common property
• details of any leases on common property.

Substantial Changes to the Common Elements, Assets or Services

Have there been any substantial changes proposed but not implemented and how will this effect your monthly common element fees? Will these proposed changes be covered by the monies available in the reserve fund.

Insurance

• Is there an insurance policy in place;
• What is the amount of insurance on the development?

Remember to:

• Review the Corporation’s declaration which sets out the rules and regulations and the structure of the Condominium Corporation. You will be advised as to whether you can have a pet in your unit, what times you must stop blaring your music, visitor parking permits and a host of other important information; and
• Look at the by-laws which governs how the corporation functions, how to elect your Board of Directors, when meetings are held, and information about notices

I would like to thank my former associate Lisa Laredo for her help in drafting this article.