Can You Rely on a Condominium Status Certificate?

A condominium status certificate is a snapshot of the status of the condominium unit(s) you have agreed to (conditionally) purchase and the condominium corporation

itself, as of the date of the certificate. The purpose of a status certificate is to bring to the attention of a prospective purchaser matters which may be of concern to them when contemplating the

purchase of a condominium unit, such as:

1. The unit and level number of the dwelling unit and any locker unit(s) and parking unit(s) that are owned by the seller or for which the seller has exclusive use;

2. The amount of the common expenses and whether the seller is in default of payment;

3. Whether there are any anticipated special assessments against the unit(s) or increase in the common expenses;

4. The condominium corporation’s financial affairs, such as whether the budget for the current fiscal year may result in a surplus or deficit, the amount of the reserve fund (which is used to pay for major repairs and replacements to the common elements), the date of the last reserve fund study, whether a plan for funding the reserve had been put into place, and whether the board anticipates that the reserve fund in the current fiscal year will be adequate to cover the expected costs;

5. Whether the condominium corporation has secured all policies of insurance that are required under the Condominium Act;

6. Whether the condominium corporation is involved in any litigation or has outstanding judgments against it; and

7. The number of units in the building that are being leased.

The Status Certificate is usually prepared by the property manager, on behalf of the condominium corporation, and is delivered to the seller upon request and payment of a set fee. It is delivered together with the condominium declaration (the constating document), by-laws, rules, current budget, last reserve fund study and notice of future funding of the reserve fund, the condominium corporation’s insurance certificate, audited financial statements for the prior fiscal year and any management or shared facility agreements, etc.

A purchaser is entitled to rely on the information disclosed in the Status Certificate. However, there are certain situations where the facts disclosed in a Status Certificate do not match realty.

I recently dealt with this type of situation. Prior to signing the purchase agreement, my client toured the locker unit that was ostensibly owned by the seller (unit 20), and which the seller had been using for the last 25 years, since she had purchased the condominium unit from the developer. The Agreement of Purchase and Sale didn’t reference the specific locker unit that was owned by the seller. The Status Certificate stated that the seller owned locker unit 21 (not unit 20). It is often the case that parking and locker units are numbered by the condominium corporation differently than their legal description, and so the parties signed an Amendment to the Agreement of Purchase and Sale noting the locker unit as unit 21, believing that the unit number painted on the locker was just the number that the condominium corporation had ascribed to the unit.

Fast forward to two weeks before closing when I searched title (obtained the original deed from the developer to the seller) and discovered that the locker unit owned by the seller was not in fact legal unit 21 but was unit 5. I immediately pulled the condominium plans and showed the location of locker unit 5 to my client, who advised me that it was not the locker unit he had been shown. He had been shown unit 20 (there was in fact no unit 21). I then sent the deed and the condominium plans to the seller’s lawyer, who confirmed that his client had been using the wrong locker unit from day one.

We immediately brought the issue to the attention of the property manager – the ones who issued the incorrect status certificate – who, for ten days, insisted that the seller owned unit 20, the locker that she had been (wrongly) using for the past 25 years. The property manager’s records were clearly wrong, and they were standing by them in the face of a registered deed which stated otherwise. Finally, after a lot of angry emails, we were put in touch with the condominium corporation’s lawyer who agreed with our assessment. In the end, the property manager was successful in having the correct locker vacated – on the morning of closing no less– so that my client was able to take possession of the correct locker unit. It was a slightly smaller unit than he had agreed to purchase, but it didn’t affect the value.

The sad thing is that the residents who were using unit 5, did not own unit 20. It wasn’t simply a case of “switching lockers.” Unit 20 was still owned by the developer! So, it’s likely that there will be a domino effect such that several residents are using the wrong lockers. But I guess that is a problem for another lawyer.

Bottom line – It’s not enough to simply review the Status Certificate. They can be wrong! Make sure your lawyer pulls the condominium plans and shows you the location of the dwelling unit and the locker unit(s) and parking space(s) owned by the seller, or for which the seller has exclusive use. Make sure the seller can convey what you’ve agreed to buy!