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Tag: condo

  • Status Certificate. What is it and Why Should You Care.

    Status Certificate. What is it and Why Should You Care.

    If you are buying a condo, you will probably encounter the term “status certificate”.  What exactly is a status certificate and why are status certificates important?

    Think of a status certificate as a comprehensive document that provides information about the current state of a condominium property.  The purpose of it is to give potential buyers as much information as possible about their unit and the overall health of the operations of the condo complex.

    What Information Can I Get From A Status Certificate?

    A condo unit is typically subject to additional rules and regulations compared to a (freehold) house because it’s managed by a Board of Directors and often a property manager. 

    The condo board is responsible for managing the budget for the overall condo, which includes upkeep, repairs and improvements to the common elements on the property.  Common elements are typically anything outside of your unit such as elevators, lobby, amenity facilities, etc. For this reason, you’ll want to make sure that the condo board is fiscally responsible and can handle necessary repairs that come up now and in the future.

    That’s where the status certificate comes in.  The status certificate is a recent collection of relevant information such as the condos by-laws (rules about things like pets, fitness facilities, swimming pools, barbecues, smoking, etc.), a current budget for the condominium, a recent reserve study (we’ll talk about that in a moment), and whether any lawsuits may be pending against the condo.

    With this information at-hand, a status certificate can help you make your purchase decision and anticipate any issues such as:

    • • Anticipated increases in maintenance fees
    • • Any major future repairs you may be liable for a share of
    • • The overall financial health of the condo
    • • Any special assessments that may be costly down the road

    Where Do I Get Status Certificates?

    You or your Real Estate agent can order a condo corporation’s status certificate. All you have to do is submit a written request and pay the $100 fee (plus HST) to management or the condo corporation.

    It takes about 10 days, although it can be rushed for an additional fee.

    Is it Mandatory to Get a Status Certificate?

    Typically, when buying a resale condo, your real estate agent will recommend that you obtain a copy of the status certificate and thoroughly review it with your real estate lawyer before you commit to a purchase.

    Most offers on resale condos are conditional upon review of the condo status certificate, so that buyers can ensure everything is in order.

    If you are getting a mortgage or refinancing your mortgage on a condo property, your lender will require a status certificate be obtained and reviewed by a lawyer as a condition of the mortgage.

    How Do I Review the Status Certificate?

    Status certificates can often be complex and contain key information within dozens of pages, we recommend having an experienced Real Estate lawyer review the status certificate for you. A lawyer will know the key information to look for, how to interpret the information and will typically summarize the key points and what you should be aware of.  

    What is a Typical ‘Deal Breaker’ That Can Be Found in a Status Certificate?

    Condos carry a monthly maintenance fee to pay for common expenses are shared between all owners. If the condo corporation is running short of funds to pay operation expenses, you will notice an increase to your maintenance fees.  While some increases may be reasonable, in some circumstances, when reviewing the status certificate is a condition of your offer to purchase, a sharp increase to maintenance fees may not be within your budget and you may decide to not proceed with buying the unit. 

    Another major item that can be found by reviewing the status certificate is called a special assessment.  A special assessment is an additional charge that condominium owners are required to pay on top of their regular monthly maintenance fees. While all owners are responsible for paying a special assessment, it’s important to realize that the condo board of directors does not need to get the approval of individual owners to add a special assessment.  For example, if the condo has an urgent requirement to repair the roof at a cost of $500K and does not have sufficient funds in the reserve to cover the cost, each unit may have a special assessment put against it, which means you and other unit owners are liable for your share of the cost of repairs. 

    Under Ontario law, there’s very little owners can do if they can’t pay or disagree with a special assessment. If an owner can’t pay, the condominium corporation can put a lean on the property. 

    Keep in mind that reviewing status certificates will only highlight any issues at the current time but does not guarantee against having condo fee increases or special assessments in the future.

    Can Deeded Help With My Status Certificate?

    Of course! As you are shopping for a condo unit, we’d be happy to review the status certificate for your property and provide you with a comprehensive, yet understandable summary.  If you are in a bidding war situation, we’d be happy to turn around a status certificate review within 48-72 hours.  Please feel free to contact us anytime.

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  • Interim Occupancy – What is it and What You Need To Know

    Interim Occupancy – What is it and What You Need To Know

    When you buy a pre-construction condo, it may take a few years before the building is ready and you get to move in.

    When it’s time to move in, you might be surprised to learn that you still might not actually own your condo unit (or at least not just yet).

    The period between the occupancy date (when you move in) and when the condo the condo’s ownership transfers to you, is known as the "interim occupancy period." During this time, you will pay the builder a fee known as the "interim occupancy fee."

    Why Is There an Interim Occupancy Period?

    When a condominium is built, ownership in the condo units can't transfer from the builder to the condo buyers until the building is registered with the local municipality.

    This process typically takes a while (The average is 6 months, but for some buildings it has taken up to 2 years). Also, since units on the lower floors will be completed months before units on the higher floors, if you are buying a unit on a lower floor, it may take time before the building is fully complete, thus making the waiting period longer for you.

    As the building nears completion, the developer will notify owners of the "interim occupancy date" for each unit. The lower the floor your unit is on, the earlier your date will be, and as a result, the longer your occupancy period will be.

    How Much is The Interim Occupancy Fee?

    The fee during the interim period is generally lower than your monthly costs would be after closing. However, if you are currently renting your home or will not be selling your current home, you will have to carry the cost of two homes.  This necessitates planning for your cashflow considerations.

    The interim occupancy fee will vary with every building and the type, size and price of the unit, but will generally be calculated using:

    • • Interest (calculated on a monthly basis) on the unpaid balance of the purchase price at the prescribed interest rate
    • • Estimated monthly municipal taxes for the unit
    • • Projected common expense fees for the unit.

    Will I Pay Fees Even if I choose Not to Move In Right Away?

    During the interim occupancy period, you'll need to pay the builder the fee regardless of whether you've actually already moved into the unit or not.

    Can I Rent My Unit To Someone During Interim Occupancy?

    During the interim occupancy period, you technically do not “own” the unit. Therefore, if you wish to lease during this stage, you’ll need authorization from your builder (in writing) to do so.

    If you are planning to rent your unit, the best time to negotiate the right to rent it during interim occupancy is when you’re first purchasing the condo.

    Permission to rent during can be included in your Agreement of Purchase and Sale, if your developer agrees.

    Does the Interim Occupancy Fee Count Towards Paying Down My Mortgage?

    No it doesn’t. You will only start paying down your mortgage after the interim occupancy period.

    Will I Incur Further Fees When Closing My New Construction Condo?

    Since new construction condos typically involve two closings (an interim closing and a final closing), your legal fees will likely increase due to the additional work required.  

    What Can I Do to Better Plan For Interim Closing?

    The best way to plan is to get educated (if you’ve read this far, you already met that goal!)

    Second, remember to set aside funds to cover your interim occupancy period.  While it is hard to predict how long the period will last, planning for at least 12-months of cash flow to cover interim occupancy expenses (especially if you cannot rent the unit), is ideal.

    Third, and most importantly, having your purchase and sale agreement reviewed by a lawyer prior to signing is always a good idea and can potentially save you thousands. Deeded offers a comprehensive review of purchase agreements with a quick turnaround. Contact our team to get started.

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