Purchasing a Condominium in Ontario: What You Need to Know

Purchasing a Condominium in Ontario: What You Need to Know

A condominium provides a form of ownership in property whereby you own a single unit in a multiple-unit dwelling or project, as well as an interest in the common areas and common elements of the project or dwelling. This page covers the details of:

  1. Condominium ownership
  2. How condos differ at closing
  3. New condominium projects

You are responsible for paying your mortgage, as well as your portion of the common elements and services, in the form of a monthly condominium fee. This fee includes your use of, and the maintenance of, facilities such as the building lobby, roof, gym, pools, landscaping, road maintenance, garbage removal, water, utilities, building insurance, and upkeep. Each condominium project differs in terms of its common elements. You can find more information about your condominium fees by reviewing the condominium’s Declaration and By-Laws.

A portion of your condominium fee is also applied to a reserve fund for future repairs and maintenance of the common elements. Reserve funds are regulated by the new Condominium Act of 1998, and we will advise you about the reserve fund of the condominium you are considering to purchase.

As a part-owner in the condominium project, you are an integral member of the Condominium Owners Association and have a direct say in its operations. You can run for election as a member of the Board of Directors, and you have a direct bearing on the fiscal performance of the condominium project.

Some of the stated benefits of owning a condominium include:

  • control over and participation in the fiscal performance of the project;
  • access to common elements that are better funded via a pool of resources, such as fitness rooms, swimming pools, landscaping, tennis courts, etc.; and
  • freedom from having to maintain the common elements–you won’t have to mow the lawn, shovel snow, plant flowers, maintain a swimming pool, etc.

Fire and extended coverage insurance for common elements is paid by the condominium association. It is your responsibility to obtain special condominium insurance on your unit’s contents, improvements and betterments you make to your unit, and personal liability insurance coverage on your unit.

As with any purchase of an existing property, you should also arrange for a property inspection by a certified home inspector. As your real estate lawyer, we will obtain and review a Status or Estoppel Certificate to ensure that the corporation unit is in good standing.

A condominium is effectively a registered corporation, making you a shareholder in that corporation. Were you to buy shares in a publicly traded company, you would likely perform due diligence on the corporation in terms of its financial health and well-being, its properties and the condition of its assets. And so it should be when you purchase interest in a condominium.

As your lawyer, we play a key role in helping you understand the state of the condominium you are purchasing, and its underlying health. For example, we will request a Status or Estoppel Certificate–a statement that reports on the financial and physical status of the corporation, as well as whether the individual unit is in arrears or not. The certificate provides valuable information on the state of the condominium corporation, such as:

  • the financial well-being of the corporation;
  • the value of the contingency funds;
  • any outstanding lawsuits for or against the corporation; and
  • any major common elements that are in disrepair.

A Status or Estoppel Certificate can take up to 10 days to acquire. Based on the information it provides, we will evaluate the condominium and point out potential issues that you will want to consider before purchasing. Your offer of purchase should be conditional on the Status Certificate being satisfactory.

The process for taking possession and title of a newly built condominium differs substantially from most home purchases. The major difference is that closing on the purchase is a two-step process, as follows:

  1. Interim closing: you will receive the keys of your condo unit and will be allowed to move in. This is called the “possession date”. Your possession date will depend on the builder’s deadlines
  2. Final closing: you will receive ownership of title. This can happen only once the condominium is registered as a corporation. This does not occur until 90% of the units are sold. Until this time, condo fees are paid to the vendor/builder.

During the period between interim and final closing dates, you will pay an interim occupancy fee to cover taxes, common expenses and the interest payable on the value of your mortgage, to your vendor/ builder. These effectively form the carrying charges of the builder while the condo project is being completed and registered.

You will not pay your mortgage during this period, as mortgage funds will not be released to the vendor/builder until the final closing.

As part of our fixed price for the purchase of a condominium unit, we are at your service to discuss and explain the specifics of a condominium purchase. To proceed with a purchase of a condominium through Guertin Poirier, please complete our INTAKE FORM. You may also consult our Condominium Purchase Checklist at any time.