April 20, 2017 | condo
Status Certificate reviews and the purchasing of a condo were almost inseparable at one point. They went hand in hand with each transaction. But this romantic relationship has hit the rocks lately. Nowadays something a little haphazard has popped up: A firm offer without anyone reviewing the status certificate. Basically no more hand in hand.
Not too long ago, when you purchased a Toronto condo, you would often make your offer conditional on a lawyer reviewing the status certificate. The seller would then have up to ten days to order the status certificate. Subsequently, the buyer’s lawyer would have an additional three or so business days to review what the status certificate revealed about a given building. Most importantly, the lawyer would review the reserve fund of the building to make sure a given condo corp had the bucks to cover any repairs or ongoing maintenance. The lawyer would also look to see if there was a special assessment on a given building. He or she would also look for any litigation between the condo corporation, representing the condo you would like to purchase, and any one else (usually a developer). Finally, your lawyer would carefully review the maintenance fees to see how much these fees would be increasing in the near future. There’s more depending on how you would like to use your condo. Your lawyer, for example, could review the condominium declaration, bylaws and rules to find out if your 150lb Great Dane will be permitted in the building under the rules of the condo.
So, with that said, if you do not have your status certificate reviewed by a lawyer, you could buy a condo unit that is potentially caught up in a legal battle, has a poorly managed building, or a large maintenance fee increase (or special assessment) coming your way.
In current Toronto real estate practices where condo unit competition mirrors the practices of houses, we often see clean offers for condo units. In other words, offers on condo units with no conditions. The deal is firm upon acceptance of the offer. The problem with this practice: Some buyers are not having the status certificate reviewed by a lawyer before purchasing. And once it is firm, you cannot pull out of the deal if you do not like what the status certificate has to say.
This often happens because there is increasingly more competition for Toronto condo units, particularly the much limited two bedroom condo. In my last condo listing, I ordered the most recent status certificate to make it available for any buyers who would like to review it prior to offer day. For me, it becomes a good way to track who is interested in my listing. When I have a buyer’s agent request to see the status certificate, I know there is serious interest in the unit. Also, any interested parties could review the status certificate in advance of making an offer. It’s better for the buyer and the seller.
This way, if a buyer wants to come in with a clean offer, she or he will have the peace of mind of having a more intimately knowledge of the inner workings of their condo before they put on the offer because there lawyer has reviewed the status certificate.
The only down side would be if the buyer paid for his or her lawyer to review the status certificate, and the unit goes to someone else. Then you are out of pocket for the money paid to the lawyer to review the status certificate. Still, I think it’s worth it if the alternative would be buying a real lemon of a building without having a clue that you’ve done so. If you feel you need to make a firm offer to have any chance of landing a condo unit, then have your lawyer review the status in advance of your offer.
Just make sure you have the most recent status certificate! In my office meeting this past week, I heard of a real estate agent who was offering a status certificate on his condo listing that was over a year old. Since then, there was a special assessment that had popped up in the building over the past few months. This special assessment would not show up on his older status certificate. So check the date.
And remember: If you feel you need to make clean offers on condos to have any chance of purchasing a unit, then just make sure you have your ducks lined up in advance.