As discussed in an earlier blog,
Introduction to Condominiums, there are many reasons for buying
a condominium ("condo") instead of a house. Condo owners
enjoy many of the benefits of home ownership, including individual
taxation and potential gain on resale, in many cases without the
burden of maintaining the exterior elements, such as mowing the
lawn or shovelling the driveway.
However, when purchasing a condominium, a buyer needs to be
aware that he or she has to accept the limitations of being a part
owner of the common elements together with the responsibilities of
being an owner of the unit. It is important that a
prospective condo purchaser receives adequate information about the
condo corporation and its finances before committing to the
transaction. The Condominium Act, 1998 provides
considerable protection to the purchasers of new condominium units
by mandating at law certain disclosure requirements. These
statutory requirements do not extend to resale condominiums.
As such, prospective resale condominium buyers need to take certain
steps to protect themselves.
First, one of a resale buyer's top concerns should be the
financial outlook of the condo corporation. Where a condo
corporation is experiencing financial difficulties, a buyer can
expect that the common expenses will increase dramatically in the
near future to compensate. As well, poor financial status can
be indicative of poor management or of major structural
Under the Condominium Act, 1998, the condo corporation
is obligated to provide a Status Certificate to anyone who requests
one after the payment of a small fee. The document provides
considerable detail of financial, organizational, and other issues
relating to the condo corporation. It is a strong substitute
for the statutory disclosure requirements associated with
purchasing a new condo.
Agreement of Purchase and Sale
The Status Certificate is of most use before actually entering
into a binding agreement of purchase and sale. Based on the
information provided in the Status Certificate, a prospective buyer
can make an informed decision regarding whether or not to purchase
the unit. Once an agreement of purchase and sale has been
signed, the buyer's options for getting out of the transaction
As a result, it is common practice for lawyers or real estate
agents to make agreements of purchase and sale conditional on
receipt and review of a Status Certificate. If the buyer does
not receive a Status Certificate or does receive one and does not
like what he or she sees, the buyer can terminate the agreement and
walk away within a certain amount of time.
Other Financial Disclosure
As with the Status Certificate, under the Condominium Act,
1998, condo corporations are also obligated to produce other
important documentation on request. A smart prospective
purchaser, who takes advantage of his or her rights, can obtain a
copy of the corporation's current budget, copies of the last
annual financial statements, the auditor's report, copies of
any insurance certificates, and copies of the current declaration,
by-laws, and rules. Many of these are provided with the
Status Certificate, but not always.
All in all, despite the fact that the Condominium Act,
1998's strongest disclosure requirements only apply to the
purchase of new condominiums, there are still powerful tools
available to resale buyers that allow them to make informed
purchasing decisions and protect themselves.
The Ontario Court of Appeal confirmed that courts will generally support and uphold decisions of condominium directors because they are better positioned than judges to make decisions pertaining to their buildings.
According to the city bylaws in Calgary, the grading of lots for new buildings must be done properly so that the water never flows toward the new building or any other nearby properties, but away from those buildings.
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