Status Certificates: Everything You Need To Know When Buying A Condo

You’ve found the perfect condo: The layout works, the building looks great, and you’re ready to move forward. Before you get too attached, there’s one document that can make or break the deal… the status certificate. The biggest surprise when buying a condo isn’t usually hidden behind the walls, it’s hidden in the paperwork.

If you’re buying a condo anywhere in Oakville, Burlington, or Mississauga, this is the single most important piece of due diligence in the entire transaction.

It contains important rules, regulations, and obligations that every owner must abide by. The status also tells you specifics about the unit you’re buying (like if the sellers are behind on maintenance fees, or if the building believes the unit owner completed un-permitted renovations in the unit). Finally, your lender will require your lawyer to review an up-to-date copy of the status certificate before they issue you a loan.

 

What Is a Status Certificate?

A status certificate is a package of legal and financial documents that gives you a snapshot of how a condo corporation is being run. It’s requested from the condo’s property management company once you’re under contract, usually as part of a status certificate review condition in your offer. Sometimes a seller has the status certificate on-hand already, which we always recommend to sellers, but unfortunately status certificates expire within 30 days. So some sellers choose to only order the status certificate once they find a buyer.

The status certificate is a snapshot of most buyer’s major concerns: the financial health of the building, whether there’s any legal issues, and whether there are any major financial or mechanical issues known with the building.

There is another set of crucial documents, but it’s very difficult to get them: The board meeting minutes are a collection of up-to-date topics that the board is actively discussing. While the board has to provide the minutes when requested, the actual timeline to retrieve them can be over 1 month. That delay means it’s very difficult to see the minutes before buying a condo.

 

The Purpose of a Status Certificate

The whole point of a status certificate is to protect you, the buyer, from inheriting problems you didn’t know existed. Unlike a house, where a home inspection covers most of what you need to know, a condo purchase involves buying into a shared corporation with shared finances, shared responsibilities, and shared risk.

The status certificate exists to answer a few critical questions:

• Is the condo corporation financially stable?
• Are there any lawsuits, or pending special assessments, that could cost you money?
• What exactly are you responsible for, and what does the corporation cover? (does the corporation cover window replacements, or broken door locks)
• Is the building being properly maintained and funded for future repairs? (has the building completed all their necessary financial and mechanical audits)
• Are there any rules or restrictions that could affect how you live in or use your unit? (Does the building prohibit dogs, or Airbnb)

 

What Does Your Lawyer Actually Review?

A status certificate typically runs 100+ pages, and most buyers understandably don’t want to read all of it themselves. This is where a real estate lawyer earns their fee. Here’s what they’re combing through on your behalf:

• The declaration and bylaws This is the condo’s rulebook. Your lawyer checks for anything that could affect your plans, like pet restrictions, rental restrictions, renovation rules, or age restrictions in certain buildings.
• The budget and financial statements Your lawyer reviews the corporation’s current budget, past financial statements, and how condo fees have trended over the past several years. Steady, modest annual increases are healthy. Sudden jumps or flat fees for years followed by a big increase can both be warning signs.
• The reserve fund study This is the building’s long-term savings plan for major future repairs (roofs, elevators, parking garages, and so on). Your lawyer checks whether the reserve fund is adequately funded relative to what the study recommends. An underfunded reserve is one of the biggest red flags in a status certificate.
• Insurance certificates Your lawyer confirms the building carries adequate insurance coverage, and checks for any gaps that could leave owners exposed.
• Legal actions and lawsuits Your lawyer reviews any current or pending litigation involving the condo corporation. Lawsuits are more common than most buyers expect, and many are minor, like an insured slip-and-fall claim. Investigate all lawsuits, because a lawsuit against a developer for a number of defects in the building might be a more concerning lawsuit.
• Notices of special assessments. If the corporation has voted on or is considering a special assessment (a one-time fee charged to all owners to cover a major repair), your lawyer flags this immediately, since it could mean a significant unplanned cost shortly after you close.
• Certificate of insurance and the unit’s specific status Your lawyer confirms there are no outstanding fees, liens, or unpaid amounts tied to the specific unit you’re purchasing.

 

Now, your lawyer is not reviewing 100+ pages in the status certificate; they are only reviewing the most important pages in the report. They also may not be doing the math on whether the reserve fund study is adequate; instead, they look to ensure a licensed and insured accounting firm recently updated the study. The same goes for the mechanical audits, they are looking to see that a license and insured company completed them when necessary.

 

The Most Important Things in a Status Certificate

If you only remember a handful of things from this guide, remember these.

1. Unit specific update. The status certificate will highlight whether the unit is behind on maintenance fees, or is subject to any action against it by the condo board. (Ie, if the board knows of any illegal renovations which might impact a buyer).
2. Reserve fund health. This is the single most important factor. A well-funded reserve means the building is financially prepared for future repairs. An underfunded one means special assessments are likely on the horizon, and you could be the one paying for it. Inside the status certificate, there is a financial audit where a certified accounting firm confirms that the current reserve fund and maintenance fee is sufficient to cover expected repairs and maintenance.
3. Any pending or recent special assessments. A special assessment is when the condo board needs to collect funds to cover a major expense; rather than increasing maintenance fees, they levy a special assessment. It’s usually used best to cover single, one-off expenses, like replacing windows, or re-building the swimming pool. A special assessment can be paid in a lump sum, or it could be added onto your maintenance fee for 1-2 years. The status certificate should inform the buyer if there is a special assessment being contemplated at the time the certificate is ordered.
4. Lawsuits. Lawsuits are VERY common in status certificates, so don’t worry about a slip and fall lawsuit… instead, if you see a lawsuit, do some research into what the building is being sued for and how that could affect you. Some of the best buildings in the city are involved in lawsuits, and sometimes the buildings come out of the lawsuit better than they went in. We’ve sold buildings where the building was suing a neighbouring building for illegally accessing their private roadway, and the building won a large settlement.
5. Bylaws prohibiting pets or use. If you’re buying as an investment or you’re bringing a pet with you, confirm the rules before you fall in love with a unit you can’t actually use the way you planned. Some buildings have a cap on the percentage of rental units in a building, while other prohibit short-term rentals, and most buildings have some pet restrictions (often limiting the number and type of pets a resident can have).
6. Financial statements/Operating budget/Reserve fund study. The status certificate should come with three or more financially oriented documents. The operating budget, the reserve fund study, and the audited financial statements.
7. Certificate of insurance. One of the major benefits of buying into a corporation is that there is a primary insurance that covers the building itself. So you’re only responsible for insurance to cover the finishings in your unit, and for your own liability in the building. If you cause a flood, your insurance repairs your finishes, the building insurance repairs the building, and anyone else impacted by the flood has their own insurance handle their repairs; then, if the flood was your fault, your liability insurance would kick in and pay for the repairs. This brings down your total insurance rate compared to a freehold home.

Timing Matters

Any good agent will insist on a status certificate review clause in your offer. That clause should not be taken out in a competitive bidding war, because the condo status shows not only the health of the building, but whether there are issues or concerns with your unit specifically. The condo status certificate clause usually gives the sellers 10 days to retrieve the certificate for you, and you have two to three days to review that certificate. While it is one of the longer conditions in an offer, it can be shortened if the seller buys the status certificate before they have a buyer.

Sellers sometimes buy the status certificate before hand for two reasons; 1, they can review the certificate with their agent and lawyer, and see whether there are any concerns that should be investigated more thoroughly before they find a buyer; and 2, if the status certificate is already on-hand, the buyers can shorten their condition in their offer.

Unfortunately, status certificates do expire… they technically expire within 30 days, but the banks will usually accept a status certificate if it expired within 60 days, and in rare cases, they may expand that to 90 days. The worst case scenario is that the buyer may have to order another status certificate to fulfil the conditions of their mortgage.

 

How Are Maintenance Fees Calculated

One of the most common questions buyers have when purchasing a condo is about maintenance fees. They want to know how much they are, what they cover, and if they might be going up soon. While the reserve fund study will estimate how much the reserve fund portion of the maintenance fee must increase each year, the remainder of the maintenance fee is comprised of expenses that are subject to inflation. If gas prices go up 15% in a year, and labour goes up 10%, the maintenance fee must be adjusted accordingly.

• The biggest part of the maintenance fee is your portion of the cost to run the building (that’s cleaning, heating, maintenance, repairs, management, concierge, etc)
• Parking. If your unit comes with parking, you will pay a maintenance fee for it
• Lockers. Lockers come with maintenance fees too
• Internet. It’s becoming more and more common for buildings to bundle internet into the maintenance fee. This allows the corporation to get low-rate internet through a major provider.
• Bike lockers, miscellaneous fees. While not as common, sometimes there are maintenance fees attached to axillary owned items like bike lockers or balconies with gas hookups.

What is paid out of the maintenance fee: 

The reserve fund is basically the condos savings account for the future. Engineers audit the building and estimate the lifespan of major components like the windows, roof, elevators etc., and the condo starts saving for those repairs through the reserve fund. The reserve fund contribution usually increases every year, with new condos only contributing around 10% of their maintenance fee towards the savings account (aka. reserve fund). But as a building matures, the reserve fund contribution must increase. However, don’t stress over a 5% or 10% increase in a reserve fund contribution, because the reserve fund only makes up portion of the maintenance fee.

As buildings age, it’s not uncommon for a reserve fund contribution to increase to 30-50% of the total maintenance fee. And, unfortunately, smaller, boutique condos, usually have higher maintenance fee compared to large, tall condos, because there are fewer people to share the cost of maintenance and upkeep.

Besides the reserve fund, the remainder of your maintenance fee covers:

• Superintendent and management
• Cleaning
• Repairs
• Elevator maintenance
• Electricity
• Heating
• Cooling
• Concierge
• Gardening services, winter maintenance
• Windows cleaning
• Running the amenities
• Seasonal decorations
• Garbage pickup

How Much Money Should Be In A Condo Reserve Fund

How much money should be in a condo reserve fund depends on the age of the building, and the repairs that the building will require. A small building with a rooftop pool should have a lot more money in their reserve fund compared to a large building with fewer amenities.

An experienced agent specialized in selling condos (like us), and a good lawyer, should be able to give you a rough idea of whether or not the property has a low reserve fund relative to the building’s age. It’s also a great idea to call the property manager and talk about the reserve fund, maintenance and repairs, and if there are any known defects in the building.

It’s also possible for a condo reserve fund to go into the negative. I sold a condo in 2020 where the building’s reserve fund was over $200,000 in the negative. It came to light the previous board was artificially keeping the maintenance fees down because they did not want to pay more money monthly; their plight to save money ended up costing more in the long run though. Often times, the reserve fund is invested in GICs and other guaranteed income savings accounts, so a well-funded, well-invested reserve fund actually saves more money in the long run compared to having to levy special assessments against residents when repairs have to be made and there is no money in the reserve. (If a building’s reserve fund goes into the negative, they have to borrow money at a high interest rate to pay for emergency repairs).

 

There is a major danger to buying a condo in “the red”… the banks (especially CMHC) are extremely risk adverse, and they will not lend money on a building with a bad financial track record. Even if you are willing to take the risk, the bank might not be willing to take the risk on you. This is especially important if you need mortgage insurance, because CMHC and Genworth are even more critical than regular banks, because they are guaranteeing your mortgage for the bank.

 

This is one of the reasons why it’s very risky to skip the status certificate review clause in an offer. It’s not uncommon for properties to become excluded from financing. Even newer buildings… we sold a unit in 2016, where the developer was being sued because of structural failures in the basement garage; the structural compromise was so significant, all the major banks black listed the building for financing until the lawsuit was settled and the structure was secured again.

• If your building is chronically underfunded, or experiences a sudden, unexpected bill, it’s not unusual for the board to levy a special assessment. Read more about special assessments here: Special Assessments, What Happens When Your Condo Board Needs Money

How Much Should Maintenance Fee Be In A Well Run Condo

How much it takes to run a building is very subjective and dependant on the size of the building, the number of units, the age of the building, and the amenities. A well-run building focuses on the balance between value, predictability, and long-term financial health.

Key Characteristics of a Well-Run Building’s Maintenance Fees

• Reasonable Cost per Square Foot: In major Canadian urban markets like the Greater Toronto Area, fees in a well-managed standard building generally land around $0.75+ per square foot per month. Boutique buildings or those with luxury amenities (like a 24-hour concierge or indoor pool) lean closer to $0.85 to $1.15+ per square foot. And true luxury buildings are usually double the norm, starting at $1.70+ per square foot.

• A Healthy, Fully Funded Reserve Fund: A well-run condo sets aside 20% to 30% or more of its operating budget into the Reserve Fund.

• Predictable, Inflation-Matching Increases: A healthy building aims for steady, modest fee increases of 2% to 4% annually. Artificially low fees (under $0.50/sq. ft. in an older building) or frozen fees for multiple years often indicate deferred maintenance, which leads to massive rate spikes later on.

• Transparent Budgeting: A well-managed condo board clearly itemizes what fees cover, such as management, legal, water, landscaping, and security.

Red Flags to Watch For

• Unusually Low Fees: Developers of brand-new buildings often set initial fees low to attract buyers, only for fees to surge once the first Reserve Fund Study is completed. It looks great on paper for new condos to have a maintenance fee of only $0.065 per square foot, but it’s not realistic of a fully independent, functioning building.

• Very new buildings (1yr/2yr) require very little repairs (and of those repairs, much of it is repaired by the builder under Tarion Warranty), it’s only after 2+ years that the true running costs of a building comes to light. So don’t get wowed by low fees in a newer building, after the first 2-3 years, the fees will normalize to what similar buildings charge.

 

What Type Of Properties Come With Status Certificates

Per the Ontario Condo Act, any property organized under a condominium corporation is required to keep a status certificate. The contents of that status certificate depends on the use and size of the corporation. Below are the following types of properties that can come with a status certificate (they are all condos):

• High rise, low rise condos
• Townhome condo
• Common Elements Condos (These are called POTLs, and they are becoming quite popular. The home itself is freehold, and you own it independently, but the land is “tied” to a shared element such as the roadway, visitor parking, snow removal, and garbage pickup. Oakville has seen a steep rise in the construction of POTLs because they allow the developers to build homes a little closer together, and install slightly smaller roadways. Each month, you pay a small maintenance fee which goes towards insurance, roadway, garbage, visitor parking, etc. but the maintenance does not cover your unit. A POTL can also mandate a certain architectural style, preventing residents from deviating from the colour scheme of the neighbourhood)
• Land can be part of a condominium, where you own the lot, but you share the infrastructure, and that infrastructure is managed by a condo corporation.
• Commercial and industrial condos. If you’re not in real estate, it might surprise you that those store fronts you see in retail complexes (usually besides a Walmart, or a large anchor tenant) are actually condos.
• Parking spots and storage lockers. A parking spot, and a storage locker, could have their own titles, making them independently owned assets within a condo corporation. This is our preferred method of ownership, because it gives you the right to resell the parking spot or locker down the road. The alternative is an exclusive use parking spot, which means the building owns it, but you have the exclusive right to use it. Exclusive use parking spots and lockers might not be transferable to a new buyer if you choose to sell the parking without selling your unit.

The Bottom Line

A status certificate can feel like a wall of legal paperwork, but it’s really just one thing: a way to make sure you know exactly what you’re buying into before it’s too late to back out. Between your lawyer’s review and a conversation with your agent (who is ideally specialized in selling condos), you can make an informed decision based on not just the unit itself, but the whole building.

If you’re buying a condo, we always recommend working with a realtor specialized in selling condos. While they are traditionally “cheaper” properties on the market, and so attract first-time buyers, and newer agents, the condo building is a specialized form of real estate, and careful attention should be paid to the fine details of the purchase. You’re buying more than just 4 walls!