Are you considering a condo purchase in Toronto? This path can be an excellent opportunity for different people at various stages of life. Often, it’s a more affordable way for a first-time buyer to get into the market. You can escape the rent cycle and settle into a place of your own, where you can begin building equity.

For a retiree, condo living offers a comfortable, carefree lifestyle in the midst of every convenience imaginable. Thanks to a long list of building amenities that include fitness centres, jungle gyms, rooftop terraces, swimming pools, and sometimes, even daycare options, some smaller families are also getting into the action.

The opportunities are practically endless. However, you always want to proceed with some caution when buying real estate of any kind, and a condo comes with a unique set of considerations. In this post, we’ll talk about why and how to review the status certificate to ensure your new home is all you hope it will be.

If you’re ready to search for your new condo, why not start with Toronto’s West End? Get the full tour of our favourite neighbourhoods in Your Complete Guide to West End Toronto Real Estate.

What Is a Status Certificate?

A status certificate is a document created by the Condo Corporation that assesses both the physical and financial health of a particular building. If you’re buying a detached house, a status certificate doesn’t apply.

That said, like a regular house, a condo building will go through some wear and tear. Repairs and upkeep go beyond a coat of fresh paint in all of the units and common areas.

Fortunately, for condo buyers, almost everything you need to be aware of is documented in the status certificate, good and bad. The key is in knowing what to look for to ensure you’re making a sound investment.

Are you buying a condo as your first home? Here are some other resources that can help:

• Buying Your First Home: A Guide to Toronto’s West End
• Is the First Home Savings Account Tax Deductible?
• Our Guide to the Home Buying Process

Why a Status Certificate Matters

If you look at a status certificate without understanding why it’s so important, you might sign off on it absent-mindedly, like the terms and conditions of a streaming service. However, think of the two worst things that can happen once you take possession of a condo:

1. Special Assessment

As any property ages, some of its systems will inevitably show signs of wear and tear. Just as with a detached property, a condo building’s HVAC system could fail or windows could require replacement. When you own a detached property, you can choose to repair now or hold off until your budget allows. A condo corporation has no such option. They must make the required repairs to ensure the safety of the building.

On paper, the reserve fund should cover all or most of the costs of maintenance. However, if funds are running low, the condo management could pass on some of the expenses to you in the form of a special assessment. The older the building, the more likely a condo owner is to receive a special assessment.

2. Condo Fee Increases

Monthly maintenance fees are a fact of life for a condo owner. They contribute in large part to the convenient lifestyle you’ll enjoy, such as snow removal and lawn care. A portion of your fees will also go toward the reserve funds for emergencies.

Well-run buildings increase the maintenance fees in small increments year over year, usually at the rate of inflation. However, without due diligence, there can be a sharp spike the next year after moving in. The time to find out is before closing, not when you receive the bill!

Check the status certificate under the heading “Statement of Revenue and Expenses.” If the board often runs on a deficit, it could be a sign that they intend to hike the fees.

In new buildings, condo fees are often set low to make the unit seem more affordable. Then, the costs increase soon after the new corporation takes over. Lastly, older buildings often require more maintenance, which may lead to higher fees.

These are the risks you know about. There can also be unit-specific issues that a status certificate will reveal, such as if the current owner is behind on their maintenance fees or has performed unauthorized renovations. If you’re not careful, you might be held responsible for both scenarios.

A thorough status certificate review doesn’t guarantee that there will never be a special assessment or that fees won’t eventually increase. However, it does give you the maximum amount of protection against unforeseen issues, especially those that happen shortly after moving in.

What types of condos and homes are available in Toronto right now? Find out by browsing our latest listings.

Pending Lawsuits and Litigation

If someone successfully sues your condo corporation, those extra expenses can find a way to haunt you after your purchase. Having a lawyer review the status certificate provides a critical level of protection that you don’t want to be without when buying a condo. You can require this review as a condition of purchase or even arrange it before placing an offer in the first place.

Thorough scrutiny can uncover any potential lawsuits against the owner or the management company. You can then make an informed choice on whether to proceed or move on to a less risky option.

CMHC Mortgage Considerations

CMHC may refuse to provide mortgage insurance if a condo’s reserve fund is insufficient or there are pending lawsuits against the corporation. Without mortgage insurance, the lender may not authorize your loan, which means you won’t be able to close your transaction.

When your down payment is less than 20%, you should always consider adding a condition of a status certificate review to your offer. Without it, you can lose your deposit or even run into legal trouble if you must back out of the deal.

Do you want a better understanding of how real estate works in Toronto before buying your condo? The posts below can help:

• What Does Closing Date Mean in Real Estate?
• Is Title Insurance Mandatory in Ontario?
• How to Check Market Value of a House in Toronto

Rules and Regulations Vary By Building

Every condo building comes with a set of bylaws and guidelines that all residents need to abide by. This can be problematic if you have a 60-lb dog and then you find out that the building doesn’t allow pets!

Some people also buy a condo with the intention of renting it out, which the rules could also forbid. Understanding what you are agreeing to will help avoid unpleasant surprises and disappointment once you take possession of your unit.

Buying real estate always comes with risks and challenges, all of which should be manageable with due diligence. However, waiving your right to a status certificate is not something we would ever recommend. It isn’t worth the risk, no matter how fantastic the deal looks on paper.

With the help of your real estate agent and a lawyer to translate the legalese, you can be confident that you are getting the condo and the lifestyle you deserve.

When buying your home or condo, our West Toronto Realtors® are happy to guide you and ensure you make an informed choice. Contact us today at 416-788-1823 or email kim@kimkehoe.com to take the first step.