Prudent home buyers do not skip the home inspection. Behind walls, carpets and ceilings, any number of unseen problems may lurk - from faulty electrical to foundation flaws. In a resale condo scenario, home inspections are rare, but there is an important parallel: inspecting the status certificate. Having a lawyer review this document is a wise precaution. In fact, it's so indispensable that lawyers typically turn it into a condition of purchase. What is a condo status certificate and what's the risk in passing it over?
Critical Information Enclosed
Upon request by the prospective buyer, a condo corporation must supply a current status certificate. The document reveals such key information as:
- The condo's rules - which, in some cases, could be deal breakers. These may include restrictions on pets, noise and even the colour or draperies you can hang.
- Financial and business details about the condo corp - including information that may impact you now and in future, such as:
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- The condo's maintenance and utilities costs
- The condo's insurance coverage
- A reserve fund study indicating whether the condo cop has enough cash to cover future repairs and replacements. If not, you could face unanticipated costs for special assessments or substantial increases in maintenance fees.
- Disclosures about litigation that the condo may be entangled in
- Lockers and parking spaces - The property listing may say these come with the unit, but the certificate confirms whether you own them or they're considered common elements in the building.
Conditional Clause
Many lawyers insert a clause into the Agreement of Purchase and Sale that makes the deal conditional on a successful review of the status certificate. This is wise. In some cases, banks won't approve a mortgage on a condo property that shows evidence of improper management.
Even if a buyer is in a position to proceed mortgage-free, overlooking the status certificate could mean shouldering more costs later than you had originally bargained on - something for serious consideration, especially by first-time buyers and retirees.
Yes, you'll pay a fee to obtain the certificate, but the small, one-time expense and the critical information contained in it may well save you financial strain and heartache later.
On behalf of Quinn Ross of The Ross Firm Professional Corporation posted in Residential Real Estate on Tuesday, September 12, 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.