The Ontario Condominium Act gives you access to vital information about a condo – including the status of the building’s reserve fund (the money they’ve got set aside for big repairs and unexpected expenses). The Act requires condo corporations to provide a status certificate so buyers and owners have a clear idea of the financial and physical state of the building, which impacts maintenance fees and unit value.
The status certificate: a report card for buildings and units
Looking for a building that’s financially healthy? Just look at its status certificate. It includes the building's maintenance history, current budget and spending decisions. In short, it shows what the condo corporation has spent money on in the past and where it will spend in the future. It reveals any red flags about the building and paints a picture of how well it has been managed.
The status certificate also looks at the legal health of the condo. Condo corporations often file lawsuits against the developer for deficiencies/defects. This isn’t something that should scare you away - as long as you can see they’ve put aside enough money to pay for the legal fees and repairs. However, if you see there’s legal action being taken against the corporation, that may be cause for concern. If it’s something small, there’s no need to worry. But if there’s a major suit on the books, you’ll want to speak with your agent and your lawyer about the risks.
But whether or not there are issues, having your lawyer review the status certificate is a critical step when you're ready to make an offer. More on that here.
What’s a special assessment?
If there’s a large repair your building needs, like a boiler replacement or roof repairs, the reserve fund should be able to cover it. But if it can’t, you may receive an “assessment,” which is a bill for your share of the cost – generally broken down into monthly payments over a certain amount of time.
Not surprisingly, it’s an expense most people would rather avoid – and one that well-managed condos generally don’t have to resort to. A healthy reserve fund should be able to cover most problems, even unexpected ones. Your agent can help you understand how to read a status certificate to better understand how well a building has been taken care of – and how much cash it has stashed away for a rainy day. And your lawyer can be useful here too, just in case there’s a legal matter that might affect you.