What to check before you buy a condo

When you buy a condo you buy two things: your unit, and a share of a building run by a corporation. A beautiful unit in a badly run building is a bad purchase. Here is how to check the building.

Resale condos: read the status certificate

The status certificate is a package of documents from the condo corporation that shows the health of the building. Make your offer conditional on your lawyer reviewing it. It tells you:

• The monthly fees and whether an increase is planned
• The reserve fund balance, the money set aside for major repairs
• Special assessments, extra charges owners must pay, either current or expected
• Lawsuits involving the corporation
• The rules: pets, short-term rentals, renovations, smoking
• Whether the current owner is behind on fees

Judge the reserve fund

Every roof, elevator, garage and window in the building will need replacing one day. The reserve fund pays for it. If the fund is thin compared with the work coming up, owners make up the difference through higher fees or a special assessment that can run into thousands of dollars per unit. Your lawyer can compare the balance with the building’s most recent reserve fund study.

Look at what the fees cover

Two buildings with the same fee can be very different deals. Ask which utilities are included: heat, water, hydro, air conditioning. A lower fee with every utility billed separately can cost more each month.

Check the unit like any other home

• Water stains on ceilings and around windows
• Noise from neighbours, the elevator and the garbage chute. Visit in the evening.
• What your parking spot and locker actually are, and whether you own them or have exclusive use
• Who is responsible for the windows, balcony, and heating and cooling unit

Pre-construction condos

Buying before the building exists has its own checklist.

• You have 10 days to change your mind. Ontario gives buyers of new condos from a developer a 10-day cooling-off period. Use it to have a lawyer review the agreement.
• The closing date can move. Builders are allowed to extend occupancy dates within set limits. Plan for delays.
• You may pay occupancy fees. There is often a period when you can move in but do not yet own the unit. You pay the builder a monthly fee during that time, and it does not go toward your mortgage.
• Closing costs are higher than on resale. Development charges, utility connection fees and HST treatment can add up. Ask for a cap on closing adjustments in the agreement.
• Research the builder. Look at their finished buildings and whether they delivered on time.

Before you sign

A condo purchase is a legal document review as much as a home tour. We arrange the status certificate, connect you with a real estate lawyer and tell you plainly if a building worries us. For new projects, join our pre-construction list to see floor plans and prices before the public launch.

General information for Ontario, not legal, tax or financial advice. Rules and rates change, so confirm details with your lawyer, lender or accountant.