When buying a condo think of it like buying shares in a company. You wouldn't want to take ownership in a company without doing your homework first, would you?
When you buy a condo, you are becoming a part-owner of a corporation, so you want to make sure the corporation is in good health.
Usually your offer to purchase will be conditional upon your lawyer reviewing the Status Certificate and finding it satisfactory.
The FIVE key things to look out for:
- Reserve Fund.
- Reserve fund study
- Common Expenses
- Special Assessments
- Legal actions
Usually your offer to purchase will be conditional upon your lawyer reviewing the Status Certificate and finding it satisfactory. However, in today's market, you may not have the luxury of including this condition and you and your agent might decide to review it yourselves before submitting an offer. Either way, here are FIVE key things to look out for:
- Reserve Fund. The reserve fund represents the account that will be drawn from for ongoing maintenance and repairs of the building. A well-managed condo should have a healthy amount of cash in its reserve fund at all times.
- Reserve fund study. By law, a reserve fund study must be completed every 3 years. The results of the study will indicate roughly how much your maintenance fees will be increasing in the short-term to cope with the on-going maintenance and upkeep of the building.
- Common Expenses. The Status Certificate will reveal if the unit you are considering buying is in arrears or if they are up-to-date with their payments.
- Special Assessments. Check to see if there any upcoming special assessments for example a new roof, replacing the heating system). Has the current owner paid for these or will you be responsible?
- Legal actions. Check if there are any outstanding legal actions against the corporation you may be responsible for paying for the judgments or other results of these actions.
It is always a good idea to have a lawyer review the Status Certificate before your offer to purchase becomes firm and binding, but even if you don't, it's important to know what it is and how it will affect you and the biggest purchase of your life.
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