If you’ve been condo shopping, you know firsthand what a status certificate is. After all, this is a term that is thrown around by real estate agents and lawyers alike on a daily basis.
But, if you’re new to the world of condos and getting ready to begin your search, you’re going to want to know a thing or two about status certificates. After all, the status certificate is one of the most important elements in any condominium building.
So, what exactly is a status certificate and what does it mean for the condo you’ve just fallen for? Read on to discover everything you need to know about condo status certificates.
What Is a Status Certificate?
Put simply, a status certificate outlines the overall health of a condominium building. Every single condo has a status certificate that is available to prospective buyers for review.
Remember, when you purchase a unit within a condo, you’re essentially co-purchasing the entire condominium building. This means that if the condo roof one days needs replacing, this will be the responsibility of yourself and your co-owners. Fortunately, all condos have a reserve fund of money that is dedicated to the maintenance of the condo building. So long as the reserve fund is in good standing, you can feel confident in the future of the building.
This is where the status certificate comes into play. Before purchasing a condo unit, your lawyer will review the status certificate of that building. This certificate will include all of the legal and financial detailing of the building including the reserve fund.
Once the lawyer has reviewed the status certificate, they will give you the green or the red light in moving forward with your offer.
Why Is the Status Certificate so Important?
When it comes to your condo search, the status certificate of the building is arguably the most important factor in your buying decision. The health of the status certificate is going to determine whether or not you move forward with your purchase.
For buildings in which the status certificate is bad, this often means the building is in poor financial standing or even involved in a lawsuit. In knowing the well-being of the condo before you purchase, you can avoid future disaster.
Who Reviews the Status Certificate?
All status certificates need to be reviewed by a lawyer.
Not only is the status certificate document incredibly long, but it also contains a multitude of complicated legal jargon. In order to determine the wellbeing of the status certificate, it must be reviewed and deemed acceptable by a lawyer.
The Status Certificate Is Good! Now What?
Now that your lawyer has determined that the building is healthy, you can move forward with your purchase. You can rest assured that you’re making a wise decision and that the future of the building is secure and in good standing.
And, If It’s Bad?
Let’s cut to the chase: If the status certificate isn’t approved by the lawyer, it’s not exactly looking good.
Sure, you can forget about what the lawyer said and choose to move forward with your purchase. But, it’s safe to say this isn’t going to be a wise decision. Keep in mind that there’s a reason the status certificate was disapproved in the first place.
Perhaps the reserve fund didn’t have what are deemed to be adequate funds. When the reserve fund is too low, residents may be required to pay-out-of-pocket to replenish the fund. This isn’t exactly what you’re hoping for when you move into a new home.
At the end of the day, the status certificate is one of the most important considerations in purchasing a resale condo. It’s either going to allow you to move forward with your purchase or steer you in another direction.
As a final note, always be sure to listen to your lawyer. In the event that they provide you with bad news about the status certificate, it’s best to move onto another building. Getting involved in a building that is in poor financial and legal standing is almost never worth it.
A Nobul Verified Agent will help you streamline this process.