Basic Guide on Completing Condo Status Certificates - What property managers can’t miss and why!

Status Certificates are one of the most important documents in condo property management and condominium law. A corporation must issue a Status Certificate within 10 days after receiving a request and receiving the applicable payment and anyone is entitled to request a Status Certificate - it doesn't have to be the owner of the unit, or even a potential buyer (though those are the most common requesters of a Status Certificate).

It’s essential for property management to be aware of what are the most important sections and what needs to be included in each of them in order to prevent catastrophic consequences for the condo corporation.

Here's what property managers need to keep an eye on when completing condo status certificates.

---

Condo Status Certificates:

Top 5 Sections of Status Certificates and How To Complete Them 

Status Certificates are intended to give a snapshot at a moment in time with respect to the corporation and the particular unit that it relates to. They bind the corporation as of the date it's given regarding the information that it contains.

Because of its binding nature, great care should be taken in reviewing and preparing it. If it's later found out not to be accurate, there may be issues for the condominium corporation that flow from that, so it's important to prevent potential problems by paying strict attention when going through the process of competing status certificates.

Status certificates are particularly important for prospective buyers of resale condos as these documents contain key information about a unit of interest and the corporation - Condominium Authority of Ontario

It's extremely important to carefully consider each section when completing a status certificate. These are the sections that we consider are the most important for every property management professional to know and master.

Paragraph 5 - Lien and arrears

Paragraph 5 requires the condominium corporation to advise whether or not the unit is in default of payment of common expenses; and, if so, whether a certificate of lien has been registered against the unit. If the owner is in arrears including any chargebacks, those need to be disclosed in this paragraph. It's very important to ensure that the corporation can rely on this disclosure in the event the unit is subsequently sold.

If the arrears are disclosed in paragraph 5 and are not paid before the unit is sold, the corporation can then seek to recover those arrears from the new owner as they attach to the unit and not the owner. If there are existing arrears at the time the Status Certificate is issued and they're not disclosed and the unit then sells, the corporation might not be able to recover those amounts from the new owner, and may end up responsible for the associated costs. If the unit is in arrears, the corporation should be making sure that it gets a condominium lien registered within the statutory time period.

We recommend reaching out to your legal counsel once the unit is in arrears for about two months to make sure the notice of lien can be sent and the certificate of lien can be registered before the end of the third month. It is also a good idea to reach out to the condo’s legal counsel and ask if they have any additional language that they want to include in paragraph 5 regarding the lien or the amount. 

Find a condo lawyer >

Paragraph 8

This paragraph reads as follows: "There are no amounts that the Condominium Act requires be added to the common expenses payable for the unit except blank". This paragraph is about any amounts that the corporation has or will incur with respect to the unit in question and those amounts the corporation is authorized to add to the common expenses payable for the unit.

If condo property management is aware of circumstances with the unit that might result in costs being added to the common expenses payable for the unit, those future costs which the corporation is aware might need to be incurred should be disclosed. If it’s not clear whether a particular situation should or shouldn't be added to this section, we recommend checking with the corporation's legal counsel as they will be able to provide more clarity and direction as to whether it might be applicable to disclose in paragraph 8.

Paragraph 12 

Paragraph 12 reads: "the corporation has no knowledge of any circumstances that may result in an increase in the common expenses of the unit except". In this paragraph, condo managers should include any details respecting any financial risk, in particular, any potential special assessment and or increase in common expenses. The purpose of this paragraph is to disclose financial risk to a purchaser with respect to their purchase of a unit.

The information that needs to be included here is any information respecting any potential increase. The key of this section is the word “potential”. There is no need to have details nor certainty that it's even going to happen. So if it's not a certainty, the wording can reflect that, that it's just a possibility, that it's not known that this is necessarily going to happen. Paragraph 12 is a bit of a catch all paragraph.

The intention is to disclose any circumstances that present potential financial risks. Even in a situation where owners aren't yet aware the potential financial risk because the information is brand new, such risk still needs to go into the status certificate. Ideally, when there's wording that's included in paragraph 12, that discloses potential risk, that same information is shared with the owners in a timely manner so that they're not surprised.

The legal obligation is to disclose the risk, regardless of what information has yet been shared with the owners. Even if you're in a situation where you haven't had time to do that, it still needs to go into the status certificate because that's what The Act requires. An example in terms of what you would put into paragraph 12 is when dealing with unexpected repair maintenance costs.

Even if there are documents attached to the status certificate that will provide the information that a purchaser needs to make these assessments for themselves. The fact that there's going to be increases also needs to be flagged specifically in paragraph 12.

Paragraph 19

This section requires the condominium corporation to disclose if it's involved in any proceeding before a court of law, an arbitrator, or an administrative tribunal. This means that if the condominium corporation is a party to a legal proceeding in some other legal forum, it's obligated to disclose its involvement in these proceedings in section 19 of the status certificate. 

It’s important to include some basic details about the proceeding. What the proceeding is about, what are the damages being claimed, who are the parties, the status of the legal proceedings, etcetera. It is also important to clarify whether the condominium's insurance is providing coverage for the legal proceeding and or if the condominium's insurer is defending the claim. This will be important for any potential buyer of a unit in the condominium.

If one of the parties in the legal proceeding is an owner or tenant at the condominium, it’s not mandatory to name the owner or tenant within the status certificate. Simply referring to the fact that the condominium corporation is involved in a legal proceeding involving an owner or tenant is sufficient. What's important is the fact that the condominium corporation is involved in the legal proceeding.

Paragraph 23

This section requires the condominium corporation to disclose whether it has entered into an agreement with the owner of a unit under Section 98 of the Condominium Act respecting changes to the common elements made by the unit owner. 

Section 98 agreement essentially will confirm that the owner who has made the change to the common elements is responsible for that change, which includes but is not limited to the repair and maintenance of the change and all related costs. If and when the unit sells, this responsibility for the common element change is then transferred over to the new purchaser, which is why it's important to disclose this information within Section 23 and to attach the Section 98 agreement to the status certificate.

The purpose of this is to ensure that the new purchaser is aware that it will take on the responsibility of the common element change if and when it purchases that condominium unit. By disclosing all of this information, the condominium avoids any arguments from the purchaser down the road that they're not responsible for the common element change because that change wasn't disclosed at the time of purchase. 

New or additional information not available at the time of issuance

if a condominium issues a status certificate and then shortly after becomes aware of new or additional information that should have been disclosed within the status certificate, should the condominium disclose this new information?

Technically, the condominium corporation is only required to issue a status certificate within 10 days of the status certificate request and that status certificate is only accurate as of the date that it's given or issued.

There is no legal obligation on the condominium corporation to update the contents of the status certificate if new information becomes available after the date that it's issued. Having said all of that, the whole purpose of the status certificate is to bring to the attention of the buyer matters which may be of concern to them when contemplating the purchase of a unit.

In some cases where new information becomes known shortly after a condominium corporation has given a status certificate to the buyer, it might make sense to give an updated status certificate to disclose this new information. The risk in disclosing this new or additional information is that it may result in a claim from the seller for contractual interference.

If the new information causes the purchaser to raise issue or concern with the seller as a result. In these cases, we suggest reaching out to the condominium's legal counsel before making a decision on the matter. 

Again, we recommend reaching out to the corporation's legal counsel for advice on circumstances such as these.

---

Status Certificates are potentially one of the most important documents in condominium law and administration. It's important to understand that a corporation must issue a Status Certificate within 10 days after receiving a request and receiving the applicable payment, just as it’s essential for any property manager to be aware of what are the most important sections and what needs to be included in each of them. 

-Stratastic Inc.

P.S. Don't forget to register for more informative articles such as these!