Buying a Condo? Make sure you ask the right questions
To avoid any surprises in your Condo purchase, here are some questions to ask.
Questions to ask:
1- When you search for a lawyer, did you search for a lawyer with specific condo real estate experience?
A well-intentioned lawyer, not familiar with condo purchases may overlook something significant. For a condo purchase you need a lawyer who will do due diligence and research the building’s finances.
2- Does the Agreement of Purchase and Sale include a clause requesting the Condo’s Status Certificate?
This certificate reveals significant information about the finances of the corporation and gives you the declaration (the Constitution), the by-laws and the rules of the condo.
3- Have you and your lawyer looked at paragraph 12 of the Certificate?
Paragraph 12 addresses whether the corporation has knowledge of any common element building plans that would drive increased costs into the common element fees or the Reserve Fund of the condo. A prospective purchaser will want to know what to expect in terms of any increases in fees.
4- Have you considered paragraph 13 of the Status Certificate, which gives you the dollar balance in the Reserve Fund within the last 90 days?
Your lawyer should compare the Reserve Fund balance in the last audited financials to the projected balance in the Reserve Fund Study. This study, required to be updated every three years, considers the repair of major items, such as the roof or the membrane for the garage. If the Reserve Fund is underfunded, the Maintenance fees could be raised. In some cases, a Special Assessment could be levied against each unit in a building. In older buildings you should allow 25 to 30% of the Reserve Fund to be set aside for repairs to major items.
5- In a new building, did you ask for the budget for the first year of operation?
As there is no financial history, this check will indicate some of the possible cost increases.
6- Have you checked the rules for the building, which are to be found in the status certificate?
These cover the condo’s rules on noise, when and how are deliveries handled in your condo and the rules on pets. You need to consider whether these rules are suitable for your needs.
7- Have you thought about whether you wish Air BnB to be permitted in your building?
Some buildings have added to the rules, a minimum lease of 6 months or 1 year. This would eliminate the possibility of any units being rented out to Air BnB.
8- Were any alterations made to the unit you propose to buy?
You can find out if any renovations to your unit were done with all the necessary approvals of the Condo Board?
9- Have you visited the building?
With a visit to the building you may be able to determine the atmosphere and culture of the building. A good question to ask would be about the effectiveness of the board in running the condo.
10-And, do you like the amenities of the building?
Are the exercise room, pool, party room and security to your liking?
These questions will help to ensure your future enjoyment of your condo.