If you are considering buying a residential condominium, it is very important to obtain, and carefully review, the status certificate from the condominium corporation. Having a lawyer review the status certificate before waiving any condition in your agreement of purchase and sale, is an important step to protecting the asset you may purchase and limiting your risk after closing.
What is a status certificate?
A status certificate is a document that condominium corporations must provide to prospective purchasers of units on request. A condominium corporation has an obligation to take reasonable steps to ensure that the content of the status certificate is accurate. The information contained in the status certificate binds the condominium corporation on the date it is given, and a prospective purchaser of a unit is entitled to rely on it.
Be aware that the condo board or the property management company can charge up to a $100.00 fee, including all applicable taxes, to prepare the status certificate.
The purpose of a status certificate is to ensure prospective buyers have enough information to assist them in making an informed purchase. It contains essential information about the physical and financial status of the condominium corporation, including any outstanding or expected claims or liabilities, major projects, or costs. It is essentially an overview for a prospective purchaser, and it should flag in clear language any financial concerns that should prompt a prospective purchaser to dig deeper.
What information must the status certificate disclose?
A status certificate must be in a prescribed form (CAO) and contain certain organizational and financial information about both the unit and the corporation as a whole. Below is a list of some of the information that must be set out in the status certificate:
- whether there has been any default in the payment of the common expenses by the unit owner;
- whether the board has declared an increase in the common expenses for the unit since the date of the condominium corporation’s budget for the current fiscal year;
- whether the board has approved any assessments against the unit since the date of the budget of the condominium corporation, which results in the unit having to contribute more money to the reserve fund; and
- whether the board has knowledge of a circumstance that may result in an increase in the common expenses for a unit. Notably, this requires the condominium corporation to give information to a prospective purchaser about any potential increase, that it knows or ought to know about, such as an upcoming project, even if no increase in common expenses or a special assessment has been approved by the board (2017 ONSC 1813).
What is a special assessment?
A special assessment is an extra one-time charge added to the owners’ common expense fees. Your condo board can charge a special assessment through common expense fees without getting permission from unit owners. A condo board may need to levy a special assessment if a previously budgeted project ends up costing more than expected or if a major piece of equipment needs to be replaced earlier than expected. Special assessment fees are levied at the same percentage as the common expenses of each unit. As a unit owner, if you fail to pay common expenses, including special assessments, the condo corporation may place a lien against your condo unit.
It is important to understand the financials of the condo corporation to properly assess the risk of any possible assessments. The status certificate should disclose whether a special assessment has been levied against the condo unit or whether there are circumstances, such as ongoing projects or repairs, that may result in a special assessment being levied against the condo unit after taking ownership. This will likely inform your decision to go through with your purchase.
How can a lawyer help you?
A condominium corporation is prohibited from claiming against a unit owner for a payment or an expenditure that the condominium corporation failed to disclose in the status certificate. If you bought a condo unit and you are subsequently faced with a levy to contribute to a project, repair or otherwise, that was not disclosed in the status certificate and ought to have been, you have options available to you.
Possible ways a litigation lawyer can help resolve your problem:
- Bring an Application against the condominium corporation for a declaration pursuant to 76(6) of the Condominium Act that the unit owners are exempt from any special assessment, levy, loan, or obligation to contribute towards the corporation’s costs to maintain, repair, or replace any asset or property not adequately disclosed in the status certificate for so long as you own the unit;
- Bring an Application against the condominium corporation for a declaration pursuant to 135 of the Condominium Act that the conduct of the condominium corporation is oppressive and unfairly prejudicial to the unit owner and that it unfairly disregards your interests; and/or
- Bring a claim against the seller of the condo unit for damages if the seller negligently or fraudulently failed to disclose information with respect to a special assessment being levied against the unit.
It is important to seek legal advice in determining what remedy works for the facts of your situation. If you believe your rights are or have been infringed, please contact one of our litigation lawyers to schedule a consultation. If you want to speak with a lawyer before waiving any conditions in your agreement of purchase and sale, please contact one of our real estate lawyers to schedule a consultation.
Bio: Ashley is an associate at Soloway Wright in the civil litigation group, with experience in condo litigation, commercial litigation, personal injury, and medical malpractice. Ashley has appeared before the Superior Court of Justice, the Ontario Court of Justice, and has experience in dealing with status certificate disputes.
Soloway Wright LLP is a community-based law firm with offices in Ottawa and Kingston. With over 75 years of experience, our team of over 35 specialty lawyers in Ottawa and Kingston offer a dynamic blend of knowledge and experience to clients requiring assistance with Business Law, Commercial Leasing, Commercial Litigation, Condominium Law, Construction Law, Corporate Finance & Securities, Employment, Labour & Public Law, Workplace Investigations, Environmental Law, Estate Planning & Administration, Insurance Law, Medical Malpractice, Personal Injury, Municipal, Land Development & Expropriation, Real Estate & Development, and Tax Law matters. Our goal is to bring your legal issue to an effective, affordable, and successful conclusion.
DISCLAIMER: This article is for general information purposes only and is not (and should not be construed as) legal advice. The information contained herein summarizes only certain aspects of the subject matter and is not a comprehensive review of applicable law. All of the foregoing is subject to legal and accounting advice based on the particular circumstances of each potential client.