Condominiums: What Is a Status Certificate

A Status Certificate is a collection of documents which is defined under the Condominium Act. It serves to document the status of the condominium corporation, a specific unit, and includes all by-laws and rules that govern a condominium.

What Does It Include?

  • A document specific to the unit which states common expense payments, defaults, increase in common expenses, special assessments, address of the corporation, contact information for directors and officers, statements regarding judgments or legal proceedings that involve the condominium corporation, a statement with respect to changes to the unit.
  • Copy of declaration, by-laws and rules
  • Financial implications of judgments and legal action
  • Budget for the current fiscal year, last annual audited financial statement and auditor’s report on the statement
  • List of all agreements to which the corporation is a party
  • Reserve fund study
  • Certificate of Insurance

NOTE: The provision of only some and not all of the mandated documents does NOT constitute provision of a Status Certificate. The time starts to count only after ALL documents have been provided.

Timelines

A condominium corporation has 10 days to provide the certificate from the date it is ordered and paid for. Keep in mind that anyone having an interest in the condominium may request a certificate—while it is typically obtained by the seller.

A Status Certificate should be no more than 60 days old at closing time. Otherwise a new certificate will be needed to ensure a smooth closing.

Reserve Fund Study

A reserve fund study is to be done every three years. It is a two-part undertaking where engineers are asked to inspect the property and determine the physical integrity of the common areas. Their study will indicate the anticipated expenditures to be made by the condominium corporation in the following three years, together with their anticipated cost.

The second part of this study is undertaken by accountants, who look at the reserve fund and determine whether there are sufficient funds to meet the expenses, and what contributions need to be made to ensure the financial vitality of the condo.

What Is a POTL?  

A POTL is a Parcel of Tied Land, which is essentially a freehold property which is inseparably linked to a Common Elements Condominium (CEC). A CEC is made of common elements, not units, but is essentially a parcel of land which is owned by a community of owners. The only way to manage the group ownership is by way of a corporation, which falls under the umbrella of the Condominium Act.

While the property may seem like a freehold, if there is any type of payment that goes towards the group maintenance of a part of the property, then it’s likely a POTL. Under the law, you must treat it as a condominium and a status certificate must be obtained prior to closing.

Why Does It Matter?

A status certificate is a tool used to ensure that a condominium corporation is up-to-date and in compliance with the law. It also serves as a tool in determining the corporation’s ability to manage and budget financials and common expenses for the condominium.

Mortgage lenders always require a valid status certificate at the date of registration. If closing is set for 60 days after the status certificate is provided, it is important to make arrangements to have a new status certificate issued before closing.

 

THINGS TO LOOK OUT FOR

  • Low reserve fund
  • Administrator appointed by the court
  • Certain types of legal proceedings
  • Changes to the unit
  • Restrictions in the by-laws (pets, smoking, BBQ’s, etc.)
  • Common Expense discrepancies or increases
  • Parking Spaces and Lockers
  • Special Assessments
  • Loans and financial standing