What is a reserve fund?
A reserve fund acts like a savings account or insurance policy for special expenditures that may come up in the future. All monies in this account have to be placed in easily accessible and safe investments, such as GICs or government bonds, and not in the stock market or any other risky venture. In Ontario, a condo has to carry out a Reserve Fund Study “periodically,” as per Section 94 of the Act. This generally has been interpreted to mean “every three years.” However, such studies can be expensive, especially for small condos that have tiny budgets. A good rule is to do an initial comprehensive reserve fund study and, then, 3 years later, do an update–which would be less expensive. This study has to be undertaken by experts with a special designation. They may be members of the Appraisal Institute of Canada or other similar accredited groups such as the Ontario Association of Certified Engineers. The purpose of the study is to examine all the systems (i.e., heating) and other physical aspects (garage, balconies, windows) and give a reasonable expectation as to when they will need to be replaced or have non-routine repairs and how much this will cost at that projected time in the future. The engineers present the results of this study to the board along with a fundraising plan. For instance, they may suggest that 10% of the condo fees go into the fund with an increase of 1% each year for the next ten years. The directors have 120 days during which to decide how to implement this plan or put forth another reasonable plan. After this, the board has 15 days to send to owners an overview of the reserve fund study and how they intend on implementing it. The board then has another 30 days to begin implementing the plan. Generally, this study and plan are sent to owners at the same time as the budget because implementation of the study may affect the budget.
What is a status certificate?
The status certificate is a document, as per Section 76 of the Ontario Condo Act, that provides basic and essential information concerning the financial status of a unit and of the condo corporation. Its main focus is to inform a prospective owner of the fees, of any large increase that is going to come into effect, of any special assessment that is being contemplated by the board, and any arrears or lien that a particular suite might have. In addition, it contains the condo declaration, by-laws, budget, reserve fund, insurance, management contract, rules, minutes of the last annual general meeting, and mention of any lawsuit involving the corporation. The purpose of status certificate is to allow potential buyers of condo units to have as much information as possible about their unit as well as the physical and fiscal situation of a building. Certificates also allow prospective owners to find out what the rules are, including whether pets are allowed.
Who can obtain a status certificate?
Anyone can, in theory. Therefore, in practice, owners who are selling and prospective buyers are the ones who obtain a certificate. Or their lawyers, or real estate agents, or a bank. Prospective owners should be informed that, when a status certificate is not forthcoming, it should be taken to mean that “everything is fine.” Therefore, if the new owner finds out that there was a special assessment right after moving, he or she does not have to pay it.
However, it is suggested here that sellers who have requested a status certificate keep a copy of the requesting letter and provide a copy to the buyer for legal purposes later.
What are common elements?
Common elements are those parts of a condo complex that belong to all owners. With a few exceptions, they constitute everything except the units in which people live. Corridors, garbage rooms, lobbies, locker areas, garages, technical rooms, the roof, grounds, walkways are all common elements. Other common elements include heating and air conditioning systems, hot water system, pipes, electrical systems, all light fixtures in common elements, and the security system. Exclusive-use common elements are those parts of a building to which only the owners of a unit or owners whose units are adjacent to them have access. The most obvious are balconies, terraces, patios, and front and backyards. Also falling into this category are parking spaces and marina slips.
What Are Restricted-Use Common Elements?
They are those parts of the building occupied by staff, such as the concierge desk and various offices, as well as electrical and technical rooms where only staff and contractors are allowed for obvious safety and security reasons. These belong to owners but are not their concern. Amenities fall half-way in that category in the sense that some may be accessible only upon reservation (guest suites, party room, theatre, bowling alley). Others may be accessible only with a special entry card and within limited hours (pool, gym).
10 day cooling off period?
When you buy a newly-built condo, you have the right to cancel the purchase within a 10-calendar day cooling-off period (the clock on this 10-day period starts from the time you receive a copy of the fully signed purchase and sale agreement or the disclosure statement, whichever comes later) You also have the right to cancel a sales agreement within 10 days after any “material change” (e.g., a significant change) to the disclosure statement. If you exercise your right to cancel, the developer must refund any deposit plus any interest that may be payable. If you make a deposit, the developer must make sure that it is held in trust, a developer can’t terminate your purchase and sale agreement without your consent or a court order. Like all new home purchases, newly-built condo units are covered by the Ontario New Home Warranties Plan Act, which is overseen by Tarion Warranty Corporation.