The buying process is the same whether you are purchasing a condo or a freehold property. There are two major differences between buying a condo or a freehold property when it comes time for the offer, The Status Certificate & The Agreement of Purchase and Sale.
The Status Certificate
The Status Certificate is one of the major differences between purchasing a freehold property and purchasing a condominum.
A Status Certificate is a short report on the current status of a condominium corporation. If you are buying a resale condominium, it is important that your agreement of purchase and sale is conditional, upon review of the Status Certificate by your lawyer.
The Status Certificate provides valuable information directly from the condominium corporation, examples of such information include, but are not limited to: Arrears or increases in common expenses; Whether any major work needs to be done to the building; The amount of the reserve fund and whether the reserve fund is sufficient for any major work. The Status Certificate also provides information about any claims against the corporation and whether the corporation is involved in any proceedings. This is important because if there are high value claims against the corporation and the corporation’s insurance does not provide coverage; the corporation can either increase the common expenses or levy a special assessment against the unit owners. If you are buying a condominium, you need to know of any potential significant increase in your monthly common expenses. .
The Status Certificate package includes the corporation’s financial statements, declaration and by-laws. The financial statements are a good indication of a corporation’s financial stability. The statements will show the trends in expenditures and receipts for previous years and provide comparisons of a corporation’s actual and expected costs. The budget for the current year will also be included, identifying both the income to the corporation, and the amount of the reserve fund. The declaration of the corporation outlines the structure, rules and regulations of the corporation for example whether you can keep pets. The corporation’s by-laws govern the corporation’s functioning, i.e., electing the Board of Directors, meetings, notices etc.
We can review the abovementioned information, and provide you with a short summary, so that you can decide whether you to proceed with the purchase
The Agreement of Purchase and Sale for Condo's
The other major difference between purchasing a freehold property compared a condo is the Agreement of Purchase and Sale. The document includes clauses which are formatted to suit the way in which condominiums operate, the lifestyle, such as pet restrictions, etc. Here is a Condo Agreement of Purchase and Sale in Plain Language.
Agreement of Purchase and Sale for Condo's