If you are con­sid­er­ing the pur­chase of a con­do­minium in the Greater Toronto Area you are one of many res­i­dents who rec­og­nize the numer­ous ben­e­fits of this type of prop­erty own­er­ship. Offer­ing afford­abil­ity, prox­im­ity to desir­able areas and lim­ited main­te­nance, it’s no won­der that con­do­mini­ums now rep­re­sent one in every three resale home trans­ac­tions in the GTA.

Before pro­ceed­ing with your pur­chase though, it’s wise to gain an under­stand­ing of how con­do­minium liv­ing dif­fers from free­hold own­er­ship. As with any type of pur­chase, the golden rule when buy­ing a condo is to get every­thing in writing.

If you’re buy­ing a new unit you can expect to receive a dis­clo­sure state­ment. It includes a descrip­tion of the project’s most impor­tant fea­tures, bylaws that gov­ern the cor­po­ra­tion, rules that reg­u­late own­ers’ liv­ing envi­ron­ment and the con­do­minium corporation’s bud­get for the first year after reg­is­tra­tion. Inci­den­tally, dur­ing the first year after reg­is­tra­tion, the condo cor­po­ra­tions must under­take reserve fund stud­ies, per­for­mance and turnover audits, and if the cost for such com­mon expenses is under­es­ti­mated, your devel­oper must pay the difference.

If you are plan­ning to buy a resale con­do­minium, you should request a sta­tus cer­tifi­cate, which offers sim­i­lar infor­ma­tion and con­firms that the owner is cur­rent with com­mon expenses. It costs $100 and must be deliv­ered within 10 days of request.

While the pur­chase of a resale con­do­minium includes a firm clos­ing date, the move-in date for a new con­do­minium can be years in the future. In this case, the devel­oper can extend clos­ing dates but if your unit isn’t ready by their out­side clos­ing date, you can ter­mi­nate the pur­chase agree­ment. Your devel­oper will have the option of ter­mi­nat­ing the agree­ment as well, if they can’t meet cer­tain con­di­tions includ­ing sales of units, plan­ning approval, and financ­ing by spe­cific dates. In this case your deposit is refunded with interest.

It’s more likely though, that you will be able to move in, begin­ning with an occu­pancy clos­ing, which takes place until the con­do­minium cor­po­ra­tion is reg­is­tered. In this case, until you take own­er­ship you’re respon­si­ble for pay­ing com­mon expenses, realty taxes and inter­est on the pur­chase price’s unpaid bal­ance, which is due on closing.

Once the devel­oper loses major­ity con­trol of the project, within 42 days all new own­ers may elect a Board of Direc­tors, con­sist­ing of at least three Direc­tors. Their respon­si­bil­i­ties are sig­nif­i­cant. The Board must ensure monies are held in trust, funds are prop­erly invested and records are kept. They can hire per­son­nel to main­tain com­mon ele­ments, enter into legal con­tracts with a per­cent­age of owner con­sent, and buy and sell prop­erty for the use and ben­e­fit of own­ers. The Board also enforces the condominium’s doc­u­ments (bylaw, and rules and dec­la­ra­tion) which spec­ify the units and com­mon ele­ments, each unit’s share of own­er­ship, and the types of costs included in monthly expenses.

As an owner, you have many respon­si­bil­i­ties as well. You are respon­si­ble for your mort­gage, prop­erty taxes, com­mon expenses, and fees to cover spe­cial expenses. Like the Board of Direc­tors, you are bound by the con­do­minium corporation’s dec­la­ra­tion, bylaws and rules. The rules for exam­ple, will likely pro­hibit you from mak­ing struc­tural changes with­out prior con­sent. You can’t dam­age or neglect your unit as doing so affects all prop­erty val­ues. Sim­i­larly, you can’t do any­thing that may jeop­ar­dize the project’s insur­ance cov­er­age. Com­mon area changes are also off lim­its with­out prior consent.

Whether you are buy­ing new or resale, it’s wise to enlist the ser­vices of a real estate agent to ensure that you’re clear on all of your respon­si­bil­i­ties with respect to con­do­minium ownership.

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Con­tact the Jef­frey Team for more infor­ma­tion  -  416−388−1960

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condo board neglect­ing reserve fund study

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