If you’ve ever bought or sold a condo in Guelph, you’ve likely encountered the requirement of a Status Certificate. This is standard with all condominium transactions and should not be taken lightly. Don’t dismiss this as boring reading material.

This blog will take you through the basics of what a Status Certificate is, as well as the importance of reviewing one prior to a purchase.

Beth and Ryan Waller are Guelph real estate agents who currently own a condo. Ryan has also acted as the President of a Condo Board in Guelph.

What is a status certificate in real estate?

A status certificate is a package of documents that is put together by the condo board within your development.

It is provided to any perspective buyers so that they can fully understand the current state of the condo unit and corporation they are buying into.

This Status Certificate should be reviewed by your Guelph lawyer to ensure that there are no hidden costs or elements that you should be aware of. Lawyers are used to seeing these documents and can point out any red flags.

What documents are in a Status Certificate?

By calling it a “certificate”, some people envision a Status Certificate being something similar to a university degree. But it’s not.

A Status Certificate is a package of files that contains many different documents. These documents outline many things related to the condominium itself. Some are directly related to the unit you are selling or buying. Others outline the rules and regulations that owners (or tenants where applicable) must abide by.

However, arguably the most important element of a Status Certificate is the financial section. These financials outline how healthy a condo corporation is, from budgets, to amenities and timelines.

Why do I need a status certificate?

Being an owner of a condo, you pay condo fees on a monthly basis. Since you’re contributing to the corporation along with all the other owners, you have the right to know what is happening with the funds from a financial perspective. More on that below.

In addition, since you are living in a community of other owners, condos have rules that you need to follow. The last thing you want to do is move into a condo with a golden retriever, only to find out that the development has a strict no dogs policy!

Some condo corporations are more strict with these rules, while others are not as strict. However, it’s not worth the risk to just wing it with condo rules.

Part of your condo fees also go towards common elements (monthly expenses) and major exterior components (reserve fund). Knowing what the condo looks after and what you as an owner look after are key factors that influence purchases and sales.

Does my lawyer need to review a status certificate?

Generally, yes. But there are a lot of what-ifs in this situation.

In previous markets where it was far less aggressive sellers market, buyers would make an offer conditional on reviewing the status certificate. This condition was generally 5 days and allowed the buyer and buyers lawyer to review it. The lawyer would summarize and inform the buyer if there are any items you should discuss further.

In current markets of multiple offers and offer dates, a conditional offer of any kind is unlikely to work in a buyers favour. Sellers will get offers without conditions and this is far more favourable.

As a result, listing agents and sellers have adapted. Now, you can order the Status Certificate before the house comes to market. This means that it will be available when the house hits the market.

Potential buyers can then review it immediately and come forward with a no-conditions offer, but still have the benefit of reviewing the status certificate.

What sort of financials are in a Status Certificate?

Imagine you buy a used car, only to find out 6 months later that the car was in a serious accident that the previous owner didn’t disclose. Or that the previous owner had a lien against the car that they didn’t disclose to you. Upsetting, right?

A status certificate is a condo version of this.

As an owner, you pay a monthly condo fee. All the other owners also pay a monthly fee based on the size of their unit.

Collectively, these fees are pooled together to pay for all the things that are related to running the condo. But they can generally be broken into two parts: month to month expenses and reserve expenses.

Month to month expenses

These are the things that go towards running the day to day operations of the condo. In this budget, you can find most of the routine costs for running a condo corp. Things like snow removal, lawn maintenance, property management fees, garbage removal and more.

Depending on the amenities that your condo has, the more expenses there will be to maintain them.  

Reserve funds

A portion of your condo fees goes towards reserve fund items. Think of this as a savings account that just holds money for a rainy day. Except, the rainy day here are the major expenses that a condo has to account for.

The Condominium Act, 1998 requires that all condominiums have a reserve fund.  A reserve fund is a special account with a financial institution such as a bank, loan and trust corporation or credit union

These could be things like a new roof, driveway paving, new windows, playground equipment and more. To ensure that the condo is allocating the right amount of money in the reserve each year, the Condo Corp has a Reserve Plan.

A Reserve Plan is carried out by a third party to develop a chronological plan of when the condo development will have major expenditures that it needs to pay for. For example, a condo built in 2000 may be allocating $200,000 to redo the roof in 2023, the doors in 2025 and repave the entire complex in 2030.

This chronological plan sets the way for the annual allocations. A good condo board will ensure that each year, the condo fees properly line up with the Plan. By doing this, it removes the likelihood of a less desirable scenario of. Shortfall.

A shortfall is when a major planned expense is due and the corporation hasn’t saved enough funds to do the work. In this scenario, the condo corporation has some tough decisions to make- potentially a Special Assessment is on the way.

What is a special assessment?

A Special Assessment is a unique situation that requires the owners to pay an additional fee. This is on top of current monthly fees. This is rare, but it does happen. In the event that it does happen, it can have serious implications to not only an owner, but a buyer.

Additionally, the Board of Directors can charge a special assessment without getting permission from condo owners. Ouch!

Let’s say you’ve been paying into your condo fees for 5 years. And you attend the Annual General Meeting (AGM). You’ve noticed that the Condo Board is not allocating funds as per the Reserve Plan. Instead of saving $100,000 per year, they’re only allocating $50,000 per year to keep condo fees low.

The problem is that over 3 years, they’ve kept the condo fees low but instead of having $300,000 in the bank ($100,000 per year), they now only have $150,000 ($50,000 per year).

Now, according to the reserve plan, the development needs to replace all the windows and there isn’t enough money to pay for it.

What happens now?

There are a few options including deferring the repairs (may make the condo look poorly), taking out a loan (now you have to pay interest) or issuing a Special Assessment. This will require that each owner make up the $150,000 shortfall.

We’ve heard of situations where all owners that require owners to come up with $50,000 each to cover the shortfall. Ouch!

What if I don’t like the condo rules?

Condo rules are put into place to have a uniform look and feel. New owners and existing owners therefore know that someone is maintaining a nice, well cared for development. After all a home is living, raising a family and a long term investment.

Some common condo rules include maintaining a consistent colour scheme, not allowing flags or banners in windows, limiting the number and type of pets, how you can use your parking spaces, noise, garbage pickup locations and more.

You should read over these rules very carefully, because as an owner you will need to abide by them. But what if you don’t agree?

Owners can talk to the condo board about the rules. In many cases, the rules are put into place when the development is first registered. From there, the condo corp will modify as necessary. If the condo corp believes that you have a valid concern, they will bring it to a meeting and the owners for democratic review.

Until a rule is changed or modified, you are expected to follow all current condo rules, whether you agree with them or not. Otherwise, you risk fines, charges and other penalties

What else is in a status certificate?

Unit specific Information

A Status Certificate also outlines unit specific elements. If you’re buying, you want to know if the owner is caught up on their fees, whether there are liens against the property. It also outlines parking and locker information specific to the unit (where applicable)

Condo development information

Does the condo corporation have any legal action against them? Are there liens against the development? How many units are on lease vs owner occupied? Is there visitor parking and where is it?

Since most condo developments have different sized units, there are different condo fees. The status certificate outlines what each units proportionate fee is.

New owner info

Often times a Status Certificate will outline new owner info. Things like who the main contacts are, how and when they pay condo fees and more.

How long is a status certificate valid for in Ontario?

In Ontario, a Status Certificate is valid from 30 days of issue. You can use a Certificate after this date. However, the recipient should understand that the information may not be the most up to date made available.

How Much Does a Status Certificate Cost?

The Condominium Act allows for the Prescribed Fee for a Status Certificate to be no more than $100 including tax. The intention of this fee is to compensate the management company for the time taken to gather and provide the latest information about a condominium unit.

NOTE many condos have online services that allow you to order a status certificate online. However, these services will charge an administrative or convenience fee + tax for the service. There may also be the opportunity to rush request a status certificate.

In Ontario, there is no government authority responsible for collection or remittance of the prescribed fee. Condo Corporations & their management companies can charge, collect and keep proceeds from the fee.

Either the Buyer or Seller can pay to receive the Status Certificate. In most cases, it is the seller who provides the status certificate because they, as owners, can contact the Condo Board directly.

How to Get Your Condo Status Certificate

A prospective buyer can get a condo status certificate by requesting it from the management and condo boards. You can also order it online at such places at statuscertificate.com. You should receive your document within ten days of application and payment.

Examples of properties with status certificates

Here are a few sales we’ve had that required status certificates:

49 Rhonda Rd #141

539 Willow Rd #25

295 Water St #51 and 295 Water St #77

If you have any questions on condos or Status Certificates, contact Beth and Ryan Waller. They are Guelph Real estate agents who can help you!