Understanding your Status Certificate

March 2015

The Status Certificate is a document which provides information concerning the financial status of a condo unit and of the condo corporation.

The purpose of a Status Certificate is to provide prospective condo buyers with as much information as possible about their unit and the building. It provides information about condo fees, upcoming increases to these fees, outstanding loans and of any special assessment under consideration. It also identifies arrears or liens for the condo unit.

Included in the Status Certificate is the condo declaration, by-laws, reserve fund, budget, insurance, management contract, rules, minutes of the last annual general meeting, common element fees, utilities paid by individual units and those included in common element fees, parking arrangements, the renter/owner mix in the building and mention of any lawsuit(s) involving the corporation.

A Status Certificate can be 100 pages or more. Its wording is mandated by the Condo Act.

A Status Certificate is an important document because purchasing a condo differs from buying other types of homes.

A Status Certificate can result in an inability to obtain mortgage default insurance. Mortgage default insurance is required by financial institutions prior to approving a mortgage with a down payment of less than 20%. When mortgage default insurance is not available, nobody can purchase a unit and obtain a mortgage with less than a 20% down payment.

This is the situation reported last year in the Globe and Mail. For one condo in Toronto, a sale fell through when the three providers of mortgage insurance in Canada turned down insurance on the mortgage. A review of the building’s 2011 Reserve Fund Study showed budget shortfalls and a 43% increase slated for 2013. Subsequent to this a loan was taken out.

Banks were prepared to lend money for the purchase of a condo in this building. Insurers were not prepared to provide the mortgage insurance which was required. The sale could not proceed under these circumstances.

A lien against a condo building or unit, outstanding taxes or litigation can be viewed as signs of poor financial health for a condo building. Mortgage default insurance may not be available to a prospective condo buyer if the status certificate suggests poor financial health for a condo building.

Condo Management Tip – Status Certificates

The fee charged for receiving a Status Certificate is $100. Very often this fee goes to the management company. In many instances, nearly all the work required to complete a Status Certificate is undertaken by condo management and liability for errors resides with the condo corporation. One Toronto condo corporation refused to renew their management contract until the company agreed to return this fee to the corporation and now benefits from this revenue.