Potential Disputes Regarding Condominium Status Certificates
As you embark on the journey of purchasing a condominium unit, you are entitled to request and review a complex document known as a status certificate. Without careful navigation, you may find yourself facing unexpected fees or legal complications, turning your dream purchase into a source of stress and financial burden.
We have outlined important details that you need to know about potential disputes regarding status certificates.
The Role of Condominium Status Certificates
Condominium corporations are required to provide status certificates upon request to potential buyers of condo units. The purpose of status certificates is to ensure that buyers have enough information to make an informed purchase.
Status certificates contain financial and legal information relating to the corporation and the particular unit the buyer is interested in purchasing. For a fulsome review of the general information contained in status certificates, please refer to our previous article on Why a Condominium Status Certificate is Important.
Should a Lawyer Help You?
The review of a status certificate without a lawyer is ill-advised. In Bruce v Waterloo North Condominium Corporation No. 26, 2023 ONSC 2995, the Ontario Superior Court of Justice sent a clear message that it is “always prudent for a prospective purchaser” to have a lawyer review the status certificate to safeguard the purchaser’s investment and minimize the risk of costly litigation.
The Unseen Pitfalls in Bruce v Waterloo
In Bruce, the owner purchased a condo unit without retaining a lawyer to review the status certificate. The owner did not read the information provided, relying instead on a short summary provided by his realtor.
The status certificate indicated that the condominium corporation had “no knowledge of any circumstance that may result in an increase in the common expenses for the unit.” Despite this language, a report appended to the status certificate contained fine print, indicating that the corporation may special assess owners and/or seek a loan in the following year to fund repairs to its lift station and water main. A special assessment is an additional charge that a condominium corporation can impose on its unit owners to cover significant unexpected or underbudgeted expenses.
The owner realized after closing that the condominium corporation was seeking authorization to borrow up to $2,500,000.00 to repair its lift station and water main, and that his expected share was $34,000.00. The owner commenced proceedings against the condominium due to inadequate disclosure on the status certificate.
After lengthy and costly proceedings, the Court concluded that the condominium did not adequately disclose the repairs and potential costs to the owner, and that the owner’s unit was therefore exempt from payment. However, the Court provided the following remarks regarding the owner’s review of the status certificate:
Omitting to engage a lawyer for the evaluation and advice on the status certificate was a clear oversight. For a potential buyer, securing legal assistance is a crucial step, and neglecting this safeguard can significantly expose them to unforeseen risks.
The Bottom Line: Protect Your Investment
The Court’s decision in Bruce v Waterloo provides that condominiums are required to provide clear disclosure of potential financial liabilities to prospective purchasers of condo units. Bruce v Waterloo also illustrates the risks stemming from improper review of status certificates.
Simply put, the review of a status certificate by a lawyer is the best way to safeguard your investment and attenuate the risk of costly litigation.
