November 2024
Prior to purchasing a condominium, it is standard practice for a prospective purchaser to receive current financial information so they can evaluate the financial condition of the condominium corporation.
A Status Certificate Package should include the most current financials. There are many reasons why a condominium corporation may choose not to provide this. None of them are good. Some condominium corporations may fail to prepare audited financial statements annually as required.
While it is advisable to obtain legal expertise prior to purchasing any property, relying on a lawyer for advice on the financial strength of a condominium corporation is not the best approach. One lawyer, when asked to advise on proceeding with a condominium purchase without current financials said “Unfortunately that’s a business decision, and we are not allowed to get involved with client’s business decisions. I’ve outlined the deficiencies to their disclosure. If the condo corporation is not managed well, you will have to consider whether you wish to get involved in this community. The condo is only responsible for the common areas, so there is comparatively much less potential for things to go wrong in a big way.”
Lack of current financials makes any condominium purchase riskier. It is wise to be concerned when current financial information is not available.
