Making a real estate transaction is a complicated process, involving mountains of paperwork and many factors coming together just right. When the deal involves the purchase of a condominium, things get even more complex with condo fees, reserve funds, annual budgets, status certificates and condo boards to consider.
Many of the aforementioned items are probably known to prospective buyers who are considering a condo purchase, but what about a status certificate? It’s not talked about quite as often as condo fees so it might not be on the radar of many buyers.
A status certificate is a prospective condo owner’s first look into the financial health of their potential investment. This comprehensive report gives all the details on the current fees that owners’ pay, any large fee increases that may be on the horizon and any liens or arrears owed by particular owner(s). Financial statements are part of the status certificate too and will show the trends in expenditures and receipts of the past, and provide comparisons of a corporation’s actual and expected costs.
A status certificate is essential to helping prospective buyers make an informed decision. It includes all by-laws, budgets, reserve fund balances, insurance and details on any major work that needs to be done to the building. The status certificate is also supposed to detail any legal actions taken or pending against the condo corporation and whether its insurance provides enough coverage.
To get your hands on a condominium’s status certificate, you must submit a written request to the condo board’s management company, plus a $100 fee. They have 10 days, as required by law, to provide the certificate.
It’s a good idea for a seller to order a status certificate before listing their condo, and to understand what’s in it (as well as their realtor) because it’s very likely that any incoming offers will be conditional upon a review of it. Doing so will also save you the 10 days waiting period that is would take for the prospective buyer to get one.