Condo Life – Headache Free Living or NOT?

Real estate agents and clients are aware that when you purchase a condo it is customary to request and review the status certificate. While this part is well known, it is surprising how few agents have ever actually reviewed a status certificate. The content in the status certificate is governed by the Condominium Act, 1998, S.O. 1998, c. 19.

There is one section included on all status certificates that all agents should be aware of. The section usually reads something like this:

It is the purchaser’s responsibility to review the declaration and description pertaining to the unit including any exclusive use common element area, to determine whether or not the vendor or any previous owner has carried out a structural change to the unit or has modified the common elements in circumstances where the Board has not given its prior written consent. As this unit and any appurtenant exclusive use common element (if applicable) has not been inspected prior to the making and execution of this certificate, the Condominium Corporation cannot comment upon matters of non-compliance which may be revealed by an inspection of the unit, and the Corporation reserves its right to enforce any matters of non-compliance notwithstanding that they may have existed prior to the issuance of this certificate.

This clause makes it the responsibility of the purchaser to determine if the unit and/or any exclusive use common elements have been modified or replaced. The reason for this is that if they are modified or replaced by the owner, and not the corporation, those items will become the responsibility of the new owners going forward.

When I review the status certificate with clients I require them to make enquires to determine if anything has been changed or modified. In addition, I have a standard acknowledgement that I require the vendor to sign to confirm that neither he nor any past owner to his knowledge has made any additions, alterations, betterments or improvements to the unit. In order to be entitled to this acknowledgement I include the following clause in my requisition letter:

Required: On or before closing a declaration to be provided by the Vendor confirming that the Vendor, or any previous owner or occupant of the unit, has not carried out any structural change to the unit or modified the common elements without the prior written consent of the Board of Directors.

This past summer when this question was asked of the listing agent on behalf of one of my clients, the answer was that the owner had replaced all doors, windows and screens. As a result, going forward these items would no longer be something the condo corporation would be responsible for, but rather, any future repairs or replacements would be the responsibility of the owner. There were other similar units available in the same building so this offer was terminated and a new offer made.

I recently acted for a client purchasing a condo unit where even though the enquiries were made, and there was no disclosure of changes, when it was time to close the deal and I requested the acknowledgement it was refused. In the end I was able to force the signing of this document. The fact is that if I was unable to have this document signed I would not have had grounds to demand it. Even more important is that even if when it was time to sign this acknowledgement a change or modification were revealed, there would equally not be grounds to terminate the agreement. If this issue is not raised when the agreement is drafted there is no way to predict what remedy can be obtained for the purchaser. The worst case scenario is that the transaction needs to be completed and the purchaser will be left with a small claims court action to attempt to obtain compensation. This is clearly an example where the purchaser will have little or no recourse and will be unhappy with all involved for not protecting the purchaser who only wanted to have a low maintenance residence.

In reviewing this matter I have decided since this matter can go to the centre of why someone purchases a condo I am going to address this in the agreement. I will be inserting the following clause in the future and would recommend it to agents:

The vendor confirms that the vendor has not, nor to his knowledge has a prior owner or occupant of the unit, carried out any structural changes to the unit or modified the common elements.

If the vendor is unable to provide this representation because there have been some changes or modifications the following clause can be used:

The vendor confirms that he or a prior owner or occupant has carried out the following (insert structural changes or modifications) but that prior written consent was obtained from the Board of Directors.

If when reviewing this matter while drafting the agreement a change or modification is revealed for which consent has not been obtained, the vendor should be required to seek that approval prior to the completion of the agreement or an abatement in the price should be negotiated for the negative impact.

Of course this article cannot assume to cover all specific fact situations. This information is included for the purposes of bringing this issue to real estate agents’ attention. The exact clauses and negotiations that might occur will be fact specific and legal advice should be sought for specific transactions.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.