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What is a Status Certificate & Why Is It Important?

July 22, 2008

What is a Status Certificate? What is so important about the status certificate when you’re buying a condo?

Aren’t the three golden rules location, location, location? Not when buying a condominium property. The status certificate (formerly called the Estoppel Certificate) is one of the most important steps when buying a condo.

What is a status certificate? Think of it as a ‘snapshot’ of the condominium corporation at that moment in time. The status certificate includes all of the crucial documents pertaining to the condominium; the declaration, by-laws, rules and regulations, budget and financial statements as well as the building’s insurance certificate. It tells you the number of units in the complex as well as whether there are any units that are leased. The status certificate discloses the common element expenses payable by the unit owner and tells you if there are any arrears. It will provide you with the amount of money in the reserve fund at that point in time as well as any special assessments levied or even proposed as of that date.

The reserve fund is of particular importance when buying a condo. In older buildings, a healthy reserve fund is a sign of good management and good management can help protect owners from suprise expenses. All of these factors affect the value of a condominium. Ask yourself if you would like to close on your dream condo only to be levied a special assessment of $5,000 (as an example) to retrofit elevators in your first year of living in the building. Condominium corporations must set aside at least 10% of the common element fees for the reserve fund.

The condo corporation is required to report any legal proceedings that the building is currently involved in as well as any judgements against the corporation.

If you are considering buying a condo, make sure your Agreement of Purchase and Sale is conditional on you or your lawyer reviewing and satisfying yourself with the contents of the status certificate. Anyone can order the status certificate, the Seller, the Buyer or even someone with no direct interest. Often it is in the best interests of a Seller to order the status certificate in advance. Make sure that you are aware of anything that could affect your condo’s value before listing the property. The status certificate is ordered in writing to the management company of the condo corporation along with the applicable fee (to a maximum of $100 including G.S.T). The condo corp then has up to 10 days to provide the status certificate and accompanying documents.

Have you had a problem with a purchase because of the status certificate? Would you like further information? Let me know your thoughts or how I can help… Thanks for visiting!

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