Back in 2012, I published an article that listed the condo documents every seller must provide to a prospective buyer. In those ‘simpler times’, the list of documents was only 7 items…..oh, how we long for those good ‘ol days.
On Feb. 1st, 2015, the new Condominium Act came into effect, and with it, the list of required condo documents grew. If you’re thinking of buying a condo, here are the original 7 are still on that list, as follows:
Condo Documents STILL required (and always had been);
1) Condo Disclosure
THIS is the most important item in the Condo Documents. I’ve attached a sample Disclosure Certificate below. It will show whether there are any increases in condo fees being planned, any major repairs or renovations being considered, and special assessments coming along the way, any law suits or insurance claims pending against the condo. Keeping in mind that as the buyer, you are buying a small percentage of the entire building (or buildings), this is most certainly information you should have.
The Disclosure Certificate has to be dated WITHIN 90 days of the offer. So for example, if you are making an offer on a condo on April 15th, 2015, the date on the Disclosure can not be more than 90 days in the past… so that Jan 5th, for example, would not be acceptable.
This is the projected budget for the next year. Estimated costs of any repairs or improvements.
3) Financial Statements (including Auditors Report, if available)
This is usually a couple of pages long and shows where all the money has gone in the past year (or two) So it will show a total amount of money received thru the condo fees (and other sources, such as parking fees, laundry fees in buildings with coin-op laundry), and then shows all the items that had been purchased and repaired and maintained over the past year or more.
4) By-laws (and Rules) and all Amendments
Funny thing: It seems that someone, wayyyy back, drafted a standard set of by-laws and then EVERY condo uses these. The original set where obviously drafted for a high-rise condo building, and so you will see things like “No Laundry to be hung from the balcony”. Whats funny is when you look at buying a stand alone bungalow condo and see this as part of the by-laws. For the most part, fairly standard, but as the condo grows and matures, owners can (and often will) update and add new rules. So looking at this a little closer is a good idea. Difference between “By-laws” and “Rules”? By-laws govern the entire building and property, whereas rules apply to the ‘common areas’, such as hallways and parking lots. By-laws require a majority approval of all owners (usually around 75%), but rules can be passed by the current board at any time.
5) Condo Declaration and all Amendments
Fairly standard legal-eze that was drafted at the time when the condo came into ‘being’. It tells how the condo board meetings are to be held, and other legal issues. Fairly standard.
6) Management Agreement
This is the agreement between the condo corp. and the current management company. These usually run for between 1 and 5 years. I consider this the least important, because as a single owner, you would have very little influence over the management company. Plus, if they really do a BAD job, the corporation simply does not renew the contract, which is why I personally think this is the least important part of the Condo Documents.
7) Building Insurance Certificate
This shows that the building insurance has been paid and is current. In cases of bungalow and side-by-side condos, the insurance may NOT be for the building itself, but should cover liability insurance for common areas, such as parking lots and walkways.
New Condo Documents as of Feb 1st, 2015
8) Statement about the cooling-off period
Standard form which explains the buyers right to cancel the purchase within 7 days of receiving all the documents
9) Statement of buyers right to cancel because of material change
This is a form which explains that, if there is a ‘material change’ in the documents between the time of purchase, and the time of possession, the buyer has another 7 days to cancel the purchase.
Example: Buyer purchases the condo in April, when condo fees are $325.00 per month. Possession date is to be July 15th. In June, the condo decides to increase condo fees to $360 per month. Now the buyer MUST be notified of this change, and he MAY have justification to cancel the purchase. (Whether or not he actually IS justified, may be up to a court to decide. I know…..don’t shoot the messenger, I dont like this part either)
10) Disclosure Statement by Owner
Different than the Disclosure Statement in Item #1 above, this one is made by the condo sellers, and 6 pages deep.
11) Proposed by-law changes
A statement of any proposed changes to the by-laws or rules that have not been put into effect yet.
12) Notice of Future Meetings to be held
Any notice for a meeting to be held after possession date. The new buyer must receive a copy of these notices!
13) Reserve Fund Study
This was actually always required, IF a reserve fund study had been done. Since these studies are now legally required (within the next 3 years) ALL condos must have these studies and the reports have to be handed to the buyer.
14) Excerpts of the Condo Plan
This is a set of drawings which show the exact location of the condo unit itself.
These are the bulk of the forms, although there are a couple of additional forms which may be required in certain, special situations. The new act also added a few twists and turns, making it essentially more onerous to sell your condo.
I read a great reminder on a Jewelers business card a little while back : “If you don’t know jewelry, KNOW your Jeweler”. And so I would like to say : “If you don’t know Real Estate (especially Condos),.. KNOW your REALTOR®”
If you’re thinking of buying (or selling) a condo (or a house), please call me anytime for a free consultation. Any REALTOR® can send you listings via e-mail, but my buyers are among the best prepared in the market. Let’s go condo-shopping.
Conversely if you’re thinking of SELLING your condo, please call me. As a condo owner, I DO understand them a fair deal better than the average agent, and this can come in handy when your prospective buyers have questions.
An Estoppel Certificate is a document often used in due diligence in Real estate and mortgage activities. It is a document often completed, but at least signed, by a tenant used in his or her landlord’s proposed transaction with a third party. Wikipedia