It’s one of the first questions I ask any new condo buyer client I have.
“Are you familiar with what a Status Certificate is?”
The truth is, many of my clients are. They quickly answer “yes”, and sometimes I wonder if they are off put by my asking. “Of course I know what that is.”
If that’s you, this may not be the Blog Post for you.
But if it’s not you, don’t panic. How did the old saying go? Keep calm, and read on…
Here’s the truth. Many people know. Especially those who have purchased a condo before. But for those who have never done so, or for those who don’t know, it’s a critical question. It’s critical to identify those who aren’t familiar with them, and explain the concept from the outset.
So… what is a Status Certificate.
In layman’s terms, a Status Certificate is the Home Inspection equivalent for a condo building.
More specifically, a Status Certificate is a legal document that every condominium in Ontario is required to produce and have available, and it provides critical information for any potential buyer of a condominium unit.
A Status Certificate outlines the operational, financial, legal, and any and all additional relevant information about the Condo Corporation that the unit in question exists within.
Why is that relevant? Well, when one purchases a condo, they aren’t just purchasing their unit, but they are purchasing a shared interest (typically proportionate to the ratio of square footage of the unit to the total square footage of the units in the entire building/complex) in the entire Condo Corporation. In essence, you’re buying a financial, legal, and operational interest in the entire building.
This document tells you what you need to pay monthly to help fund the Condo Corporation, called “Maintenance Fees”, and what those maintenance fees cover.
Are pets allowed in the building? Is there a size restriction? Find out in the Status Certificate!
How would one find out how much money, known as a Reserve Fund, does the Condo Corporation have on hand in the case of a “rainy day”? Check the Status Certificate.
Is the Condo Corporation currently undergoing any legal disputes, and why? Who are they with, and for how much? Check the Status Certificate!
It really is a crucial and invaluable document, and one that every buyer must consider and review before agreeing to purchase a Condominium.
Sounds daunting? It really isn’t.
Frankly, most Status Certificates are very straightforward, and “clean”, as we say. Nothing out of the ordinary, nothing really of concern. It’s good to know though – that’s why we review.
While it’s prudent to have a lawyer review these documents always, I and most experienced agents can flag a Status Certificate that looks “clean” very easily, and will also know what buildings have had a long history of being “clean”.
Similarly, we can flag when there’s something that’s out of the ordinary, and in those cases a lawyer should absolutely review, and investigate any potential “red flags”. The truth is, in most cases, these “red flags” can be explained and are not as big of a deal as they initially appear. Nonetheless, any buyer should do their due diligence, and decide if the risk/reward trade-off is worth the risk from their perspective.
So, how does one do this review?
In a lot of cases (and I’d argue all agents should do this, but that’s a conversation for another time), the Status Certificate is pre-ordered by the listing agent, so that the buyer and the requisite parties can review the paperwork and give it the proverbial rubber stamp before presenting the offer. Easy, and straightforward.
However, in the cases where there is no Status Certificate present when a buyer is prepared to present an offer to purchase, one could make an offer conditional on the review of the Status Certificate. In this case, negotiations would occur on an offer, and if an agreement is reached, the sale then is conditional on a pre-determined period of time.
Often when I present or receive these types of offers, it would be ten business days for the seller to produce the Status Certificate, and then three or five business days for the buyer to review the Status Certificate. Every agent and every case is different though, but I would say those are fairly “typical”.
From there, once the Status Certificate is produced, the review process is the same as if the Status Certificate was available from the outset. Should the Status Certificate prove to be satisfactory, the buyer would then “waive” their condition, and the deal would be firm and binding to both parties.
With that, that’s pretty much Status Certificates 101! In sum, a Status Certificate is a crucial document regarding the purchase of a condominium, and one that requires a careful review, but is not nearly as intimidating or daunting as it might seem from the outset.
If you have any more questions about Status Certificates, or want to share some of the craziest things you’ve seen in past Status Certificates you’ve come across (another interesting idea for a Blog Post!), please feel free to reach out! We’re always happy to chat Real Estate, even subjects that some may find as mundane as long legal documents!
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