An estoppel certificate contains information in respect of the common expense obligations of the owner and of default in payment, if any, together with statements and information as prescribed by the regulations. Condominium bylaws, rules and regulations are part of the information in such a certificate.

Under the current Condominium Act, "any person acquiring or proposing to acquire an interest in a unit from an owner may request the corporation to give a certificate...and the certificate binds the corporation as against the person requesting the certificate in respect of [what is]...shown in the certificate, as of the day it is given". So, for example, if the Estoppel Certificate shows that there are "no arrears" of condo expense charges on that date, whether, in fact, there are or are not arrears, the certificate can be used to "uphold" or "enforce" what it shows: "no arrears".

If the condominium corporation fails to give the certificate within seven days after its receipt of the request, then, as against the person requesting the certificate, the corporation is deemed to have given a certificate stating no default. Under the current legislation, that is the primary consequence of failure to deliver a timely certificate. Proposed legislation is expected to make the corporation liable to any person making the request for any damages resulting from the failure to give a status certificate within ten days of receipt of the request. That is seen as significantly more onerous.

Among real estate lawyers, it has been the practice that, as near to the closing day as possible, the purchaser's lawyer, on behalf of the purchaser, requests and obtains an estoppel certificate and pays the appropriate fee to the corporation.

In this fashion, the purchaser's lawyer obtains the statutory protection for the purchaser. Since, however, many standard form agreements of purchase and sale used throughout the province (But not the Toronto Real Estate Board form) require the vendor to pay for the cost of the estoppel certificate, the vendor allows a credit on the statement of adjustments for the amount paid by the purchaser to acquire the certificate which by regulation is now no more than $50 (plus GST).

Would-be-purchasers are now more inclined to insist upon an estoppel certificate before even putting in an offer to buy or to make the offer conditional upon acquisition and satisfactory review of such a certificate. Information about the reserve fund, whether the corporation is suing or is being sued and special assessments, if any, are regarded as particularly significant information when an acquisition is being considered.

It may be arguable that a condominium corporation must respond to a request for a certificate made by a person who has not actually made an offer but who might make an offer to purchase a unit listed for sale. Is this a "person... proposing to acquire an interest in a unit from an owner"? Must a prospective purchaser, at least, put in a conditional offer before being seen as a person "proposing to acquire" and before the condominium corporation is required to respond to a request for an estoppel certificate? Although the consensus is that the courts would give the expression a very broad definition, this nice legal point does not appear to have yet been judicially decided.

Let us leave that issue for the moment and turn to another matter which can also be somewhat thorny. In the case of a person proposing to acquire a condo unit and who wishes to review the estoppel certificate before making a firm commitment, who pays for such a certificate when it is acquired at this early stage of the process? Certainly, if this were being done within the context of a conditional offer to purchase, then the contract should specifically address this issue. More likely, the standard form purchase and sales agreement will not mention the procedure or costs related to acquisition of two estoppel certificates. At first blush, however, it might seem that fairness would dictate that the prospective purchaser should bear the cost of the first certificate and the vendor the cost of the certificate traditionally acquired just before the closing date. However, the rationale for requiring the vendor to pay for even one certificate is not easy to come by. Accordingly, that practice may not be helpful in attempting to decide who pays for the first certificate. (It might be interesting, if not useful, to compare the procedure and costs incurred by a prospective purchaser of freehold in acquiring certificates from municipal and utility authorities. All these costs are borne by the purchaser and no contribution is made by the vendor.)

Apart, therefore, from what is "fair" and apart from the issue of whether or not a prospective purchaser can actually extract useful insights from reviewing the estoppel certificate (in advance of making a firm commitment about a purchase), acquisition of two estoppel certificates is apt to generate uncertainty and controversy unless specifically spelled out in a conditional Agreement or contract; that is: precisely who will acquire and who will pay for these certificates.

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Click here to view: Ontario's New Condominium Act