Condo Living

June 22, 2022 Published by Golden Horseshoe Chapter - By Stephanie Sutherland

Purchasing and Selling Condominium Units: The Importance of the Status Certificate

From the Volume 12, Summer 2022 issue of the CCI GHC Condo News Magazine

The purchase and sale of a condominium unit is different from purchasing or selling a non-condominium home. There are specific considerations that need to be taken into account, to make sure that both the buyer and seller are aware of what exactly is being sold and bought, and that the condominium corporation issuing the Status Certificate has done so in accordance with the provisions of the Condominium Act, 1998 (the “Act”).

After signing an Agreement of Purchase and Sale, the next step for a purchaser should be to order a Status Certificate. Many sellers will order a Status Certificate when they first place their unit for sale, as a courtesy to prospective buyers. However, it is important to remember that a Status Certificate is only binding as of the date that it is issued. So, if a Status Certificate was provided to the Seller two months prior, then any changes to that information that occurred since will not be included, and the purchaser is only entitled to rely on the information as of the date of that original Status Certificate. Therefore, a purchaser should always make sure to request an up-to-date Status Certificate to have the most relevant and correct information, while the Board and management must ensure that the same Status Certificate is not just changed to reflect a more recent date, but that the information contained in the Status Certificate is still correct.

When requested, the Status Certificate must be provided within 10 days of when the request is received, and the fee is paid. Under the Act, the maximum fee that can be charged by a condominium corporation for the Status Certificate is $100, although an additional fee can potentially be charged if the Status Certificate is required on an urgent or expedited basis. A property management agreement may permit a manager to charge more to the condominium corporation for additional work (e.g. printing versus electronic copies), but $100 plus a possible expedited fee is the most that can be charged to the purchaser requesting the Status Certificate.

If the Status Certificate is not provided within the 10-day deadline, then the condominium corporation is deemed to have provided a ‘clean’ Status Certificate, i.e., stating that everything with the unit is in compliance, that there are no anticipated significant increases to the common element fees, no litigation in which the condominium corporation is involved, etc. This means that if the unit was in fact in arrears for common element fees, for example, and the condominium corporation later attempts to collect those arrears from the new owner, that new owner will not be liable for those arrears because the condominium corporation failed to advise the owner of the arrears as required in the Status Certificate.

Once the Status Certificate has been received, the purchaser’s lawyer should review the Status Certificate and enclosures, first to ensure that everything has been provided that the Act requires, and second to determine certain information about which a purchaser would be particularly interested.

In addition to the information to be included in the Status Certificate form, which is now a mandated government form (and can be found on the Condominium Authority of Ontario’s website), there are certain documents which must be provided as part of the Status Certificate package. The documents to be provided include:

• copies of the current declaration, by-laws, and rules;
• a copy of the condominium’s budget for the current year;
• the most recent audited financial statements and the auditor’s report on those statements;
• a list of all current agreements as listed in sections 111, 112, or 113 of the Act and any agreements between the condominium corporation and another condominium corporation (e.g., shared facilities agreements) or agreements between the condominium corporation and the owner of the unit;
• a copy of the condominium corporation’s Certificate of Insurance;
• a copy of the notice to owners of future funding of the reserve fund, if the condominium corporation has sent out such a notice to the owners;
• a copy of any section 98 agreements in place with respect to the unit; and
• a ‘Schedule H’ provided by the Declarant setting out the standard unit definition, if the condominium corporation does not have a standard unit definition in its by-laws.

A full list of all the information and documents to be provided is set out in section 76 of the Act and section 18 of the Act’s O. Reg 48/01.

When looking at the Status Certificate, the purchaser and their lawyer should make sure that the correct unit has been listed – both the legal description (e.g., Unit 3, Level 2) and the municipal unit number (e.g., Unit 203). Another item that should be noted in when reviewing the Status Certificate, and that is often a source of confusion for purchasers, is how parking and storage (if any) areas are dealt with at the condominium corporation. Both parking spaces and storage lockers can be part of the Unit (e.g., the driveway, for parking), separate legal units, or they can be common elements. If common elements, they can be assigned by the condominium corporation or simply available to any unit owner on a first-come, first-served basis. This information is not part of the government mandated form Status Certificate, but will be provided in the enclosed documents, most particularly the declaration.

Perhaps most importantly, if parking or storage are part of the common elements, it is essential for a purchaser to understand that that common element parking space or storage locker is not being purchased as part of the transaction, but is instead ‘owned’ along with all of the other common elements by all unit owners of the condominium corporation according to the percentages set out in the Schedule “D” of the Declaration.

I frequently encounter unit owners who are certain that they have purchased ‘their’ parking space, when in fact it is a common element, and that owner has no legal claim to that space. While not an item that is specifically set out in the Status Certificate form, it may make sense for the condominium corporation to have a cover letter that is sent with the Status Certificate that specifically explains parking and storage at the condominium corporation, because those two items are such a common source of confusion and disagreement.

The purchaser will want to ensure that the Status Certificate matches what the purchaser believes they are purchasing; if it does not, a conversation with the purchaser’s real estate agent and lawyer is required to confirm what exactly is being purchased, and to confirm that the Agreement of Purchase and Sale accurately reflects that.

Some of the other key items in the Status Certificate that the purchaser’s lawyer will look at, and which the purchaser should also consider, include whether the seller is up to date on common element fees, whether the condominium corporation has any knowledge that the common element fees may rise in the next year, are there any legal proceedings with which the condominium corporation is involved, and whether there are any section 98 (alteration/indemnity) agreements in place on title to the unit. Again, if these items are not listed correctly and accurately by the condominium corporation, the new owner may have some claim against the condominium corporation when they suddenly become aware of financial or other obligations that they have that the Status Certificate did not properly address.

The reason the Status Certificate is so important is that when a condominium unit is purchased, the new owner takes on all the rights and responsibilities associated with that unit. If the previous unit owner owed common element fees, the fees go with the unit and not with the specific owner, so the new owner will be responsible to pay off those arrears. If the previous owner entered into a section 98 agreement with the condominium corporation, the new owner is bound by the terms of that agreement. The importance to the condominium corporation of providing an accurate Status Certificate, and to the purchaser of obtaining and carefully reviewing the Status Certificate, cannot be overstated.

Finally, in addition to the legal and financial aspects of the Status Certificate package, there are also lifestyle considerations that every purchaser will have. A purchaser’s lawyer cannot carefully review the documents for those issues unless the purchaser identifies specific items to look for, because every purchaser will have different priorities. Some people want to ensure that they can smoke in their unit, others want to be able to bring in their pets, and still others will want to be able to plant flowers in the front garden. If there are specific items that a purchaser is concerned about, they should ask their lawyer to look through the Status Certificate package for provisions in the declaration, by-laws, and/or rules that might regulate or restrict those activities.

In summary:

• DO request an up-to-date Status Certificate (purchaser);
• DO ensure that the Status Certificate is accurate and up-to-date (condominium corporation);
• DO provide the Status Certificate within the required timeline (condominium corporation);
• DO review the Status Certificate and enclosed documents to make sure that all the legally required information has been included (purchaser);
• DO NOT assume that a real estate lawyer will review the documents for specific lifestyle issues unless requested (purchaser); and
• DO NOT underestimate the importance of carefully reviewing the Status Certificate package and its enclosures (purchaser)!

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Stephanie Sutherland is a condominium lawyer at the Kitchener office of Cohen Highley LLP. Stephanie assists condominium boards, unit owners, and managers with day-to-day governance matters, compliance issues, drafting and registration of new and amended condo governance documents, court and CAT proceedings, and mediations and arbitrations.

She sits on several Grand River, Golden Horseshoe, provincial, and national CCI committees, and is on the Golden Horseshoe Board. Stephanie also regularly speaks at CCI events, and contributes articles to condo industry.