Check The Status Certificate Before Selling your Condominium or Purchasing a Resale Condominium Unit.
This is a great article that highlights issues surrounding the purchase and or sale of a Condominium Unit.
The Following article was written by Mark Weisleder, Mark is a GTA Real Estate Lawyer.
Most condominium resale agreements are conditional upon the Buyers lawyer being satisfied with the contents of the condominium status certificate. If the contents of this certificate are different than what was represented to the buyer when they signed the original agreement, then the buyer may be able to cancel the deal.
And Here’s why:
Ina recent Agreement of Purchase and Sale a Buyer agreed to purchase a condominium resale unit from a Seller for the purchase price of $339,000.00. In the original agreement, it was represented that the condominium maintenance fees were $285.96 per month and that there were no special assessments contemplated against the unit.
However, when the buyer received the status certificate, it stated that the maintenance fees for the unit were $314.56 per month which was a 10% increase. There was also a one-time special assessment of $457.87.
Based on this information, the Buyer refused to waive the condition and tried to cancel the agreement. The seller refused to return the buyer’s deposit of $16,000. The case went to trial. At trial, the buyer won the return of their deposit and the seller appealed.
The seller claimed that when he signed the contract, the maintenance fees were $285.96 and that he was not aware that they were going to be increased in the coming year. The special assessment was just a one-time problem that was being paid by the seller and there was nothing substantially wrong with the building. He thus argued that the buyer was not acting in good faith when they reviewed the status certificate with their lawyer.
In a decision dated February 2, 2015, the Judge determined that the buyer did exercise their condition in good faith, based on the increased maintenance fees and the special assessment, even if it was one-time only.
Buyers and lenders are both typically concerned when there are special assessments levied against condominium unit owners. It could indicate mismanagement or poor planning by the board of directors.
In addition, a 10% increase in maintenance fees on a year over year basis is also a concern.
In order to protect yourself, whether buying or selling a re-sale condominium, here are 5 key things to remember:
1. When selling, check your own condominium status certificate in advance, so that no errors are made on any listing or any agreement of purchase and sale. The cost is $100 and is well worth it.
2. If you know that there will be an increased maintenance fee coming shortly, find out what it is and disclose this to the buyer before they sign any offer.
3. If you know there are any special assessments coming, disclose them right away.
4. When buying a re-sale condominium, make sure that your lender is also satisfied with the contents of your status certificate. Even if you are satisfied, if the lender or CMHC has concerns, your loan may not get approved.
5. Buyers still must try and satisfy any condition in good faith. A condition is not an option to cancel your deal.
This Article was written by Mark Weisleder, Mark is a GTA real estate lawyer, Keynote Speaker and Author. Mark can be reached at the following if you have any legal questions or require real estate related legal advice:
email@example.com or (416) 702-2499 to set up a meeting or consultation.
If you are considering Buying or Selling your own Condominium, please contact me:
SCOTT ROY, Sales Representative
RE/MAX JAZZ Inc Brokerage
(905) 728-1600 or (905) 435-7355 / firstname.lastname@example.org