If you’re looking to buy or sell a condo, you may start to hear the term “status certificate” come up. What does this mean, and why is it important?
Unless you’re looking at a pre-construction condo or a new build, you will almost always need a status certificate. (You may also hear the word “Estoppel,” which is simply the old term for status certificate.)
It’s a document the condominium corporation can provide that outlines critical information about the building, including:
- Names and contact information of the directors of the corporation
- A detailed breakdown of expected expenses for the building
- The management contract
- The insurance provider
- The current budget for the condo
- Rules and regulations residents must follow
- How much reserve funds the corporation has access to
- Whether there are any judgements or recent legal action against the corporation or building management
Thinking of buying or selling in the Toronto area? Here are some other resources and guides to help you:
- Why Real Estate is About Relationships
- Top Communities Within Toronto
- What’s Your Home Worth? Get a Free Evaluation
How Getting A Status Certificate Helps Buyers
Imagine finding a beautiful condo in an older building that appears to be well maintained. It’s bright and spacious, and even the neighbours seem friendly and welcoming. Best of all, the price is just right.
Did you just find the deal of the century, or is there a catch? There is one way to find out.
Requesting a status certificate helps you spot any significant red flags with the building and save you a world of hassle before buying the unit. You will know at a glance if the building is underfunded, if condo fees are about to increase significantly, or if the building management is being sued.
You can also analyze the numbers to ensure the building has the reserve funds necessary to cover any repairs and maintenance that come up, which is especially important in an older building.
Even if the condominium corporation is in good standing and there are no liens against the unit, you still want the status certificate. It lets you know what rules and bylaws you’ll have to abide by. This will help you avoid mistakes like buying a unit that doesn’t allow you to bring your beloved pet with you.
A status certificate is so vital to purchasing a resale condo that your bank will almost certainly require it before authorizing your loan.
Can Getting A Status Certificate Help A Seller?
You might think it sounds counterintuitive to request a document that might hinder a buyer from making a decision. However, if your building is well managed, there is no reason not to be proactive. Producing a status certificate upfront demonstrates confidence in your unit and can go a long way toward establishing buyer trust.
What if your condo corporation doesn’t have the best track record?
Even if the document does uncover a potential problem, trying you hide it won’t help. If you don’t produce the status certificate, the buyer is almost certain to request it.
Unless your buyer pays in cash, the bank will almost certainly require it before they will approve the mortgage.
Many buyer agents will also insist on the review of the certificate as a condition of the offer.
In any case, you want to know about any issues in advance so you and your real estate agent can address them in the most positive way possible.
Who Pays For A Status Certificate?
The fee for pulling a certificate is typically $100 unless you request expedited service. Whether it’s the buyer or seller who pays depends on the city.
For example, in Toronto, the seller is expected to pay. In Ottawa, it is the buyer’s responsibility.
However, a real estate agent can negotiate who pays for the certificate depending on what kind of market we are in. In a strong seller’s market, the buyer may cover the cost to compete with other hopefuls.
If buyers are few and far between, it may benefit the seller to order the certificate ahead of time.
You can order a status certificate by contacting the condominium corporation directly. Some buildings may even allow you to make your request online at their website.
What To Watch Out For?
Once you get your status certificate, what should you look for? It is an official document, and some people may find it difficult to understand the jargon and legalese. However, it’s essential to know what you’re getting into before committing to your purchase.
The wisest course of action is to consult with a lawyer or real estate agent with experience in condo sales. They can help you understand the terms contained within the status certificate and guide you toward the right purchase for your lifestyle.
Education is key when buying your next home or condo. My buyer’s guide will take you step-by-step through everything you need to know. Download it here for free.
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