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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.
Brampton Real Estate Board 