::.Toronto Real Estate - Status Certificate.::

WHAT IS A CONDOMINIUM?

What is a Condominium?
A condominium building is like an apartment building. However, instead of renting your individual apartment (unit), you own it. Others who live in the building also own their units. In addition, all of the owners in the building collectively own and share the common areas (hallways, laundry room, exercise room, etc.). So when you invest in a condo, you invest not only in the unit you’re purchasing, but indirectly in the units of others and in the common areas as well. You invest in the philosophy that collectively, all unit owners will help run your building and maintain a satisfactory or even exemplary standard of quality for the benefit of all owners.

This is done by electing a Board of Directors, who in turn hires a management company to oversee building maintenance, record keeping, and the collection of Condo fees. The Board also solicits support from the unit owners for the distribution and execution of things that need to be done to keep the building running well.

Remember that it is your responsibility to thoroughly investigate the pros and cons of your new purchase. If you need help interpreting documents, you may want to seek assistance from the Board of Directors of the condo you are considering or counsel from a real estate lawyer or someone with the professional expertise & qualifications to assist you.

Nonetheless, despite the few disadvantages of condominium living, condos continue to remain the most popular form of real estate ownership here in Toronto and the metropolitan area.

Confused about the difference between lofts and condominiums?

Cooperatives (or Co-op Condominiums)
Ownership of a cooperative unit is generally considered and interest in personal property because the Cooperative Corporation has ownership of the entire property (the entire apartment building if we use our example from above). This corporation, in turn, grants each member the right to occupy a unit: herein lies the most significant difference between Cooperative and Condominium ownership. One’s ownership interest in the corporation and the right to occupy a unit is considered an ownership interest in personal property and not in real estate. Nonetheless, the daily operation of Cooperative and Condominium associations is very similar.

Lofts
Lofts are traditionally known for their minimal walls, high ceilings and generous, open space. While historically and principally made popular in New York City, there has been strong demand for this refreshing and unique approach to contemporary, urban living right here in Toronto. As a result, Lofts have made an astonishing debut, and is sharing as much success and popularity as Condos.

Types of Townhouses & Condominiums

Condominium Townhouses

The inside of the condo townhouses are owned by each person. However the ownership of the exterior portion (common elements) is shared amongst all the owners. The condo fees pays for this shared portion.

The shared ownership portion (common elements) include the outside of the building (including the roof), parking spaces, play areas for the kids, outside yard, outside of the building, exterior door, garage door.

Freehold Condominiums

Freedominium Townhouses

These townhouses are the names given to condominium townhouses by a builder where the maintenance fee was reduced by having the owner look after the exterior of the building (including the roof) as well as the yard.

Under the CMHC Condominium Buyer's Guide, you own the plot of land and any structure on that land such as a house or townhouse. You are normally responsible for the care and upkeep of the entire house, including the exterior walls and roof, as well as the lawn, garden, driveway and garage.

They share common elements such as roads and playground. However, the building exterior is the responsibility of each owner - not the condominium corporation.

Freehold Townhouse

These townhouses are not condominiums since there are no common elements. The townhouses share their walls the way semi-detached homes do, but they don't set any funds aside to repair things such as the roof. Also, the homeowner is responsible for the insurance of the building as well as the contents

New kinds of condominiums

The new legislation makes possible new kinds of condominium developments:

"Phased" condo. Although you may have seen condos marketed and advertised as "phased" in the past, today, they are really separate condominium corporations. Under the new Act units and common elements can now be added in stages, over a maximum 10-year period, as part of one condominium corporation.

"Common elements". These are condominiums that consist only of common elements, but no units. For example, homes could be on separate pieces of land, with facilities such as a golf course or recreational centre as the common elements condominium.

"Vacant land" condo. Under this type of condominium corporation the units can consist of vacant land, upon which, following registration, and owners can decide later what to build. This may be suitable for a mobile home development, for example.

"Leasehold" condo. These are units built on land that is leased by the developer—purchasers will never own the land. They buy a leasehold interest in the unit and common elements for a fixed number of years. This interest can be sold.

What kind of new condominium developments will be possible?

STATUS CERTIFICATE

Previously it was called an estoppel certificate. The new STATUS CERTIFICATE can be ordered by anyone (realtors, appraisers, a person walking by the building) so long as a written request is made together with the fee (maximum of $100.00, including taxes). From the time the request is made in writing and the fee is paid, management has up to 10 days to make the STATUS CERTIFICATE available with all the usual accompanying documents (including declaration, by-laws, budget, financial statements, rules, insurance certificate). One of the new statements in the Status Certificate obligates management to report the number of units in the complex that management is aware are leased units (as opposed to owner occupied units) which might be a factor for consideration for some buyers.

For a buyer to rely on the contents of the STATUS CERTIFICATE, it is no longer a requirement that the certificate be ordered by (or in the name of) the purchaser. Any Purchaser or mortgage lender is entitled to rely on whatever the STATUS CERTIFICATE discloses as of the date the Certificate was issued.

The STATUS CERTIFICATE must now disclose much more information about reserve fund, existing circumstances that might require a future increase in common expenses (or special assessment), possible litigation, etc. The Certificate must list the types of agreements (including management agreement) to which the condominium corporation is a party and a statement that the person requesting a status certificate has the right to obtain copies of such agreements upon paying an additional fee for labour and copying charges.

RECOMMENDATION: It is highly recommended that when vendors list a condo for sale, the vendor should order a status certificate since almost any incoming offer will be conditional on a status certificate review. Vendors and listing agents should make themselves aware of what prospective buyers will see in the status certificate and seek any needed clarification about any issues with the property manager before (if possible) receiving an offer. Knowing, and understanding the product being sold is important! Also, by ordering the status certificate at the time of listing, a vendor can save 10 days upon receiving an offer (to obtain the status certificate later with uncertainty and lost time) while the clock is ticking for a status certificate condition in a purchaser's offer.

The buyer's new condition clause should be one that requires the vendor to pay for the status certificate since the vendor can more quickly order and obtain the status certificate due to the vendor's easy access to management (although anyone can order it); also, the purchaser's lawyer might need to order a new status certificate as an update before closing (if the closing date is more than 60 days into the future) which means that the vendor pays for the certificate during the condition period and the purchaser pays for any update needed before closing by the purchaser's lawyer (depending on how far into the future the closing date is).

Reserve Fund Study - Previously there was no requirement in the old Act for reserve fund studies which were generated by management companies who recommended them be done, as prudent managers. The main requirement in the old act to fund reserves was that a minimum of 10% of monthly common expenses paid must be deposited into a reserve account for future major capital expenditures (eventual replacement of roof, windows, major repair items, etc.).

Under the new Condominium Act, existing registered condominium corporations must prepare a reserve fund study within three years of May 5, 2001. Until such a study is done, the condo corporation must still deposit at least 10% of the monthly common expenses into the reserve fund. The study evaluates the remaining life expectancy of each building component over a projected 30 year period, considers the projected replacement cost of each building component and a financial plan to fund such replacement through the projected reserve fund with recommendations for what amount the monthly deposit should be into reserve (whether it be 10%, more, or less, depending on the current balance in the reserve fund, the existing state of repair of the project, etc.). Reserve fund studies must be updated in intervals of not more than 3 years from the last study.

The Condominium Board of Directors must propose a plan for funding the reserve fund within 120 days of receiving a reserve fund study. Notice of the funding plan must be sent to unit owners within 15 days of the proposal by the Board of Directors who have 30 days from sending the notice to begin its implementation. WITHIN 10 years of the first reserve fund study done between May 5, 2001 and May 5, 2004, the funding plan must achieve an adequate level of the reserve fund to satisfy the requirements proposed by the reserve fund study. Once a level of adequacy is achieved for the reserve fund, future reserve fund study updates must ensure that any inadequacy of the reserve fund is remedied within the next fiscal year following the fiscal year in which the study, or update, was completed.