5 Things to remember when reviewing a condominium status certificate

Watch the video:  Click Here https://youtu.be/8zSeOBZnhd8

As a result of bidding wars for condominiums, buyers are being asked to review a condominium

status certificate in advance in order to submit an offer without conditions. As a service to our

clients, we offer this review at no additional cost. Here are 5 items I look at and questions I ask

when reviewing a status certificate in advance to give the buyers comfort before making their

purchase decision.

1. Have units sold and closed in this building in the last 3-4 months?

If units are selling and closing, it means that other lawyers and lenders have approved the

building, and that CMHC most likely has not refused to lend on the property, which has

occurred many times when concerns have been raised. This should give you some comfort

that all is in order in the building.

1. What is the condominium corporation number?

Condominiums are registered in numerical order, with the first buildings being registered

about 50 years ago. There are approximately 2700 condominium corporations in the Toronto

area. That means if you are number 2400, your building is likely 2-3 years’ old. If it is

number 1500, then it is likely 12-15 years’ old. If it is number 200, then it is closer to 45

years’ old. This can give you some clues as to when the roof may need to be repaired and

whether there is enough money in the reserve fund for major repairs that may be required.

For example, a roof may need to be replaced every 20-25 years. This is the major expense for

most townhouse projects.

2. Who is the property manager?

When the property manager is a familiar name, there is comfort that the condominium board

is being given the correct advice in how to properly maintain the building now and in the

future. If you hear names such as Brookfield, First Service or Dell, this is typically a positive

attribute for the corporation.

3. Does the reserve fund match the reserve fund study

The reserve fund study should be updated every 3 years. Be suspicious if there is no current

one. The amount in the reserve fund today should be similar to the amount that was projected

in the last reserve fund study. If there is a shortfall, then do the following calculation. If there

are 100 units in the building, it is likely your unit is 1% of the expenses. That means if the

reserve fund is short 1 million dollars, your unit share would be $10,000.00. If there are 200

units, your share is one half a percent or $5,000.00. This is likely your worst case scenario.

Just adjust your purchase price accordingly. You can do the same math if you need to cost a

special assessment or lawsuit affecting the building.

4. Is AirBNB permitted?

The status certificate will tell you how many units are leased to tenants. Many buildings

have minimum lease periods of 6 months to 1 year, which would prohibit Air BNB. More

and more condominiums are trying to prevent this, due to security and insurance issues.

5. Pets and Parking

Make sure you understand in advance whether pets are permitted at all in the building or

whether there are weight restrictions on pets that are permitted. There is no point wasting

time on buildings where the buyer has a pet that will not be permitted. Make sure you

physically see the parking space and the locker before signing any offer, so that there is

no confusion with what you expect to receive on closing. It is possible that the number on

the floor may not be the same as the legal unit number. That can be determined by just

asking the property manager for details.

If you understand how to read a status certificate, you can assist your clients during a

very stressful condominium bidding war.

If you have any questions about status certificates, or need one reviewed, please do not

hesitate to contact me at mark@realestatelawyers.ca or toll free at 1-888- 876-5529.

Author: bramptonrealestateboard

At the Brampton Real Estate Board (BREB) we believe in the ownership of Real Estate. Our objective is to contribute to the capability and growth of our members in their endeavors by marketing all forms of real property throughout the greater Brampton, Halton Hills and Caledon marketplaces and beyond. The Brampton Real Estate Board is dedicated to providing an environment in which it’s Member REALTORS®, employees, Board of Directors, and Committee volunteers are encouraged to grow, succeed and develop in order to provide the highest level of professional conduct and service.

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