When buying or selling a condominium unit in Ontario, chances are that someone will bring up the term “status certificate” at some point in the transaction. Obtaining and reviewing a status certificate is an important step when buying a condominium unit in Ontario. This blog post addresses some introductory questions about status certificates, including what they are, how to obtain one and how much they cost.

What is a “Status Certificate”?

Status certificates allow potential buyers of condominium units to obtain important financial and legal information about a condominium unit and the condominium corporation.

A status certificate is a creature of statute. The information a status certificate is required to contain is included in the Condominium Act, 1998, and the Regulations made thereunder. Examples of the sort of financial information one can expect to find in a status certificate include information on common expenses, the budget for the corporation, the amount of the reserve fund and whether any special assessments have been levied against a unit. Examples of the sort of legal information one can expect to find in a status certificate include copies of the corporation’s declaration, by-laws and rules, and information regarding any outstanding judgments or legal actions against the corporation. These examples are not an exhaustive list of the requirements under the legislation, but are meant to highlight some of the noteworthy items.

Status Certificates are Binding on the Condominium Corporation

Status certificates bind the condominium corporation as of the date it is issued. The financial and legal status of a corporation can change over time. It is therefore important that one not rely on an old status certificate. Usually, status certificates are ordered at the outset of the real estate transaction. If there is a significant lapse of time between entering the Agreement of Purchase and Sale and the closing date, the buyer’s lawyer may require a current status certificate, and sometimes lenders will require a more up-to-date status certificate before advancing mortgage funds.

Apart from putting a buyer on notice of the financial and legal health of a condominium corporation, a status certificate also lets the buyer know whether the seller is in default of the payment of common expenses in respect of the unit. This is important because unpaid common expenses form a lien against the owner’s unit, together with all interest owing, reasonable legal costs and reasonable expenses incurred by the corporation in connection with collection of the unpaid amount. A certificate of lien for unpaid common expenses may be registered against title to the unit and enforced in the same manner as a mortgage.

How Do You Obtain a Status Certificate and How Much Does it Cost?

A status certificate is ordered from the condominium corporation, usually through the corporation’s property manager.

A status certificate can be ordered by either the buyer or the seller in a transaction. In fact, subsection 76(1) of the Condominium Act, 1998, states that the condominium corporation shall give a status certificate to “each person who so requests” one (emphasis added). The preprinted text in the OREA Agreement of Purchase and Sale for resale condominiums (Form 101) used by real estate agents includes a provision for the seller’s consent to a request by the buyer or the buyer’s authorized representative for a status certificate from the condominium corporation.

Years ago, while some prudent sellers would order one and make it available to prospective buyers, it was expected that a buyer include a condition in an Agreement of Purchase and Sale on obtaining and reviewing a status certificate as part of the buyer’s due diligence in buying a condominium unit. In recent years, with multiple offers becoming commonplace, the market has shifted such that sellers now routinely order and make status certificates available to prospective buyers in the hopes that a buyer will make an unconditional offer.

When buying a new condominium unit from a builder, the builder will usually provide a status certificate prior to the closing date and charge a fee for providing it on the statement of adjustments.

Regardless of who orders the status certificate, under the Condominium Act, 1998, a condominium corporation must provide the status certificate within 10 days after receiving the request for it and payment of the fee charged by the corporation. The consequences for a corporation failing to provide a status certificate within the prescribed time are significant. If the corporation fails to provide a status certificate, on the day immediately after the required time has expired, the corporation is deemed to have provided a status certificate stating that:

  1. there has been no default in the payment of common expenses for the unit;
  2. the board has not declared any increase in the common expenses for the unit since the date of the budget of the corporation for the current fiscal year; and,
  3. the board has not levied any assessments against the unit since the date of the budget of the corporation for the current fiscal year to increase the contribution to the reserve fund.

It is apparent that the legislators had in mind that a buyer should not suffer any negative financial consequences of a corporation’s failure to provide a status certificate within the prescribed time.

As alluded to above, condominium corporations are entitled to charge a fee for preparing a status certificate. The amount of the fee a corporation may charge is currently limited by Regulation to $100, including all applicable taxes. In the experience of the writer, however, it has been observed that some corporations may charge an additional fee for responding to a request to provide a status certificate on an expedited basis.

Contact the Real Estate Lawyers at Duncan, Linton LLP in Waterloo for Advice on Residential Property Transactions

Our team of experienced real estate lawyers at Duncan, Linton LLP regularly review status certificates for our clients. If you are buying or selling a condominium unit, or have questions regarding a status certificate, contact us online or call us at (519) 886-3340 to get in touch with one of our lawyers.