guardians, self-counsel texts and books written to alert the novice
in real estate acquisitions increasingly contain a common theme:
Prospective purchasers of pre-owned condominiums should acquire and
review an up-to-date estoppel certificate before considering the
purchase of a particular unit. It appears that, in the resale
market, the estoppel certificate is seen as equivalent to the
disclosure statement required in the sale of new condominiums.
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.
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".
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.
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.
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).
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.
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.
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.)
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.
here to view: Sales After Expired Listing
here to view: Ontario's New Condominium Act
Fera is an Ottawa lawyer who has assisted many in the purchase
and sale of condominiums.
page is provided as a service to the reader. It is not an
advertisement for, nor an endorsement of, the author. The views
expressed are those of the author.
is for limited instructional and informational purposes only.
Information is not warranted as accurate. Nothing herein is
intended as legal or other advice and nothing herein is intended
as a recommendation or endorsation.