Buying A Condo? Make sure you ask the right questions

Stats Canada tells us that from January to April 2017, total housing starts in Ontario totalled 18,707 and of these 47% or 8,804 were condominiums. There are lots of reasons to purchase a condo; first time home buyers view condos as a good entry into home ownership, and they can be the perfect fit for empty nesters wishing to downsize.

Contemplating a condo purchase?  Here are some suggestions

Get a lawyer – not just any lawyer. Find one who works in the condo field. If you don’t know a condo lawyer, try or check out CCI (Canadian Condominium Institute) www.cci-grc-ca and go to its Professional Partners Directory. Ask friends and lawyer you may know. But make sure you get a lawyer who understands condos.

The reason is that too often, a well-intentioned but uninformed solicitor can overlook something that could have significant consequences for the purchaser. Imagine an instance in which a purchaser’s lawyer failed to inform them that the Reserve Fund (the savings for major repairs in a condo building) was underfunded by $200,000. The implication of this for the purchaser is that needed repairs may need to be postponed or a Special Assessment could be levied against each unit in the building.

The Condominium Act requires that the corporation shall provide a Status Certificate to each person who requests it. This certificate includes common element fees, the most recent budget, most recent audited financials, the declaration (the constitution of the condo), as well as its by-laws and rules. It will also disclose whether any special assessments have been or maybe levied, any legal actions to which the condo is a party, and statements with regard to the status of the Reserve Fund plus other information pertaining to the Corporation.

One of the most important components of the Certificate is paragraph 12. It addresses whether the corporation has knowledge of any circumstances that may result in an increase to the common expenses for the unit. The Corporation is legally bound to describe what may drive costs into the common element fees or the Reserve Fund. A prospective purchaser will definitely want to know what to expect in terms of future condo fees.

Another key element of the Status Certificate is paragraph 13, which states the amount in the Reserve Fund within the last 90 days. Your lawyer should compare the Reserve Fund balance in the last audited financials to the projected balance in the Reserved Fund Study. If the actual balance is less than the recommended amount from the study, that may indicate there are issues that make the property less appealing.

If you have any questions or need further information, call the Property Manager and speak to them.

Condo living can be ideal. You give up the need to do the outside chores while you enjoy the benefits of location, a shared sense of community and in most cases a nice environment. But be sure you are well informed and knowledgeable about your shared environment.

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