The Status Certificate is a document written by a condominium corporation that discloses certain financial, governance, and legal information about the condominium corporation and a specific unit that is part of the condominium corporation. The purpose of a Status Certificate is to give a potential buyer of a condominium unit important information about the condominium corporation’s assets, liabilities, and plans, so that the potential buyer can make an informed decision about whether to purchase the condominium unit.
According to the Condominium Act, 1998, a Status Certificate must include (among other items):
- A copy of the current declaration, by-laws and rules of the condominium corporation;
- A copy of the budget of the corporation for the current fiscal year, the last annual audited financial statements, and the auditor’s report on the statements;
- A statement with respect to:
- The most recent reserve fund study, and updates to it;
- The amount in the reserve fund no earlier than at the end of a month within 90 days of the date of the Status Certificate; and
- Current plans, if any, to increase the reserve fund;
- A statement of the common expenses for the unit and any current default in payment of the common expenses for the unit;
- A statement of the increase, if any, in the common expenses for the unit that the condominium corporation’s board has declared since the date of the condominium corporation’s budget for the current fiscal year, and the reason for the increase;
- A statement of the assessments to increase the contribution to the reserve fund, if any, that the condominium corporation’s board has levied against the unit since the date of the condominium corporation’s budget for the current fiscal year, and the reason for the assessments; and
- A certificate or memorandum of insurance for each of the current insurance policies.
If you purchase a resale condominium unit, your realtor may include a provision in your Agreement of Purchase and Sale stating that your offer to purchase is conditional on your real estate lawyer reviewing the Status Certificate of the condominium corporation. This means that, for a period of a few days after you sign the Agreement of Purchase and Sale, you can take the Status Certificate to a real estate lawyer to review. Once your lawyer has completed the review, you can decide whether or not you would like to move ahead with your purchase.
During the review period, your lawyer will make sure that the Status Certificate complies with the Condominium Act, 1998. For example:
- Has the condominium corporation included all of the information that is required to be included in a Status Certificate?
- Has the condominium corporation completed a reserve fund study within the past three years?
- Does the condominium corporation have the required amounts of insurance?
- Was the condominium corporation properly declared?
Your lawyer should also flag important features of the transaction. For example:
- What parts of the condominium are common elements, and what are the rules relating to the maintenance and use of the common elements?
- Are short-term rentals, like AirBNB, allowed in the building?
- What obligations would you have to the condominium corporation if you wanted to lease your unit?
- What parking space will be assigned to you?
Real estate professionals, beware! In a recent case of the Ontario Superior Court, Bruce v Waterloo North Condominium Corporation No. 26, 2023 ONSC 2995, an owner of a condominium unit was not required to pay a special assessment levied against the unit, because the condominium corporation had failed to include in the Status Certificate adequate disclosure about the possibility of the special assessment.
Even though the attachments to the Status Certificate (e.g., the audited financial statements) described circumstances that suggested that a special assessment could be required, the Status Certificate itself did not explicitly flag that a special assessment could be required. Justice Gibson explained that a Status Certificate must “flag in clear language any financial concerns that should prompt a prospective purchaser to dig deeper into the ‘fine print’ of all of the attachments included [with a Status Certificate].” Notably, Justice Gibson also commented that “It is always prudent for a prospective purchaser to [retain a lawyer to review the Status Certificate and advise them], and choosing not to do so potentially exposes them to risk.”