This article is written by Natalka Falcomer, VP, Corporate Development, Chestnut Park Real Estate Limited, Brokerage

 

Buying a condo can be an overwhelming task. There are fewer listings available, according to TREB’s most recent market report. This means heightened competition for buyers. Which means buyers are challenged with the task of acting quickly and doing so without making a bad hasty decision. This is especially true in the condo market as sale prices continue to increase while available property continues to decrease. The way to achieve a balance between speed and excellent outcomes is to ask the right questions.

 

The Secrets In A Status Certificate You Must Uncover to Avoid A Bad Deal:

 

 

 

What are my common expenses?

Not all common element fees are created equal. While most fees include common element operational expenses and building insurance, not all include gas and hydro. As such, it’s critical to review what is included in the common element fees, as well as if the fees are going to be increasing. Make sure that the current owner isn’t in arrears for non-payment of these fees, as these arrears may fall on your lap if you want to close or prevent the deal from closing altogether.  

 

Is the Condominium Corporation balancing its budget?

Condominium Corporations may not be able to accurately determine whether there will be a surplus or deficit before the fiscal year is over. Nonetheless, you can avoid a poorly run condominium if it’s clear that the corporation has failed to meet its financial obligations in the past, if there are any special assessments that will be paid by the owners and if there are any outstanding debts to the city, such as taxes, or claimants (more about that below).  

 

Is the reserve fund robust?

Reserve funds are in place to pay for any capital improvements. A part of the monthly common element fees is diverted to this fund, making the replenishment of this fund the owner’s responsibility. Reserve fund studies should be provided to you and they’re critical to review. Reserve fund studies determine if any “big ticket” items must be replaced in the near future (e.g. new swimming pool, HVAC systems, roof, parking lot renovations). They also detail the  Condominium Corporation’s current and past balance sheets and conclude if unit owners will have to increase contributions in the future due to upcoming expenditures or inadequate funds.  Review these studies to identify if there are any plans to increase the fund (which puts you on the hook) and if the fund is adequality financed to cover any anticipated “big ticket” items.

 

Is there a lawsuit?

Several Condominium Corporations in Toronto’s downtown core are undergoing litigation due to shoddy building. If there’s a judgement against the Condominium Corporation, you’re on a hook for a portion of it! As such, review the status certificate to ensure that there are no outstanding judgements against the Condominium Corporation. If so, find out if the Condominium Corporation’s insurance policy covers these claims. If not, this may affect the common element fees, for which you’re responsible.

 

Any renovations in the unit or common element?

An owner who has renovated may not have had permission and may be required to restore the unit or affected common elements to its original condition. If permission was granted, require this in writing.  As you walk through the unit, look for any additions that are different from other units or the floor plan.

 

Can I rent out this unit? What about pets?

Some Condominium Corporations have significant restrictions on who can lease and for how long. These rules are found in the Corporations’ declaration. The declaration will also stipulate if you can have a pet, where visitors can park, if you can bring alcohol onto communal patios or have a BBQ on your balcony. Be sure to understand the full restrictions as many deals – including leases – have fallen apart due to no pet provisions.

 

Will there be changes to the services?

Condominium Corporations have contracts will different service providers. The Corporation may be changing its security contractors or cleaners. These changes may cost you or the new service providers may simply be terrible providers. As such, find out about the quality of the current service providers, if they’re changing and how much this change will cost you.

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