Q I am refinancing my condo at a great interest rate and the bank has approved the new amount but my lawyer is requesting that I obtain a status certificate from the condo corporation. What is this and why do I have to incur this $100 cost?
A A status certificate is an important document issued by the condominium corporation under section 76(1) of the Condominium Act of Ontario that certifies a variety of items with respect to your condo such as if you are up to date in the payment of your common expenses, if there are adequate reserve funds to address any unforeseen large repairs that need to be done, if there are any plans to increase the condo fees, if the condo corporation is involved in any legal proceedings or has a judgment against it, just to mention a few. It is required that your lawyer review this certificate and the accompanying condominium documents to make sure that everything is as it should be. This is especially important when you are purchasing a condo and is usually one of the conditions written into the offer to be satisfied prior to proceeding with the transaction.
Why then would you have to obtain one if you are refinancing, because presumably you would know most of this information through condo meetings and information provided by your board of directors? Well, herein lies another one the peculiarities of real estate law. When your lawyer drafts your new mortgage to be placed on title, they are ensuring by way of instruction from the bank and reporting back that you have good and clear title to the property. The bank wants to make sure that its’ collateral (your home) is not compromised by any outside sources. In this capacity, your lawyer is acting dually and should point this out to you at the time of signing.
So, in reality, although it seems like your lawyer is complicating and increasing the cost of the refinancing process by requesting a status certificate, in fact, they are
just following instructions from the bank: Without which there would be no final funds forwarded.
Jeffrey D. Cowan is with Cowan & Taylor, Barristers & Solicitors. The info in this article should not be relied upon as legal advice.