Buying a condo in Waterloo Region: documents and questions

What you own, and what the corporation looks after

The Condominium Authority of Ontario (CAO) describes condominiums as property complexes made up of individual units that include shared possession of common elements, such as garages, elevators, lobbies, gyms and pools. You own your unit and share the common elements. The corporation maintains those shared parts and insures the building, funded by owners' monthly fees.

The label on a listing does not tell you where your unit ends and the corporation's responsibility begins. That line, for things like windows, balcony doors, a townhouse roof or a front walkway, comes from the declaration and by-laws. If you are weighing an apartment against a townhouse or a freehold bungalow, our guide to condo, townhouse, bungalow or life lease compares the options side by side.

The status certificate: the document to read most closely

A status certificate is the corporation's own snapshot of its finances and rules. The CAO's status certificate page says it covers:

• The governing documents
• The budget and financial statements
• A statement about the reserve fund
• The common expenses for the unit and any arrears
• Any special assessments since the start of the current budget year, with the reasons
• The addresses of the directors
• Insurance information
• Any litigation involving the corporation

Anyone may request one. The corporation can charge up to $100 including all applicable taxes and must provide it within 10 days, according to the CAO. A faster service may cost more, though the standard option has to be offered.

Reading it is not a box-ticking exercise. Have your lawyer review it, and ask your agent to point out anything unusual so you can raise it with your lawyer before your conditions expire. Your agreement of purchase and sale may allow a short window for this review, so line up your lawyer before you start looking seriously. If you are selling a condo, the same certificate is what the buyer's side will be reading about your building.

Reserve fund studies: how the building plans for big repairs

Roofs, elevators, garage membranes and mechanical systems wear out. A reserve fund is the pool of money corporations set aside for those costs. The CAO's page on reserve funds says a reserve fund study must be done at least every three years by qualified professionals, on a cycle that alternates between different classes of study over seven years. After a study, the board has 120 days to review it, and must notify owners within 15 days of proposing a funding plan. The CAO notes that contributions may need to increase.

For a buyer, the practical questions are:

• When was the most recent study done, and what funding plan did the board adopt?
• Does the plan assume contributions will rise, and by how much, according to the board's own documents?
• Which large items are due for work in the study's timeline, and how are they to be paid for?

You do not need to interpret a study yourself. Ask your lawyer to read it with the budget and the status certificate, and ask the corporation's manager anything that is unclear.

Special assessments

The CAO's page on special assessments describes one as "an extra one-time charge" added to owners' common expenses to cover shortfalls in yearly budgets. It lists three common reasons: an unforeseen expense, such as major equipment failing earlier than expected, under-budgeting and litigation costs.

The status certificate shows assessments levied since the start of the current budget year, but it does not predict future ones. Ask whether the board has discussed any upcoming major repairs, whether any are before the corporation's lawyers, and how the last large repair was funded. Who owes an assessment that was levied before closing, and how it is adjusted in the sale, is a contract question for your lawyer.

Condo fees, also called common expenses

The CAO's page on common expenses says the fees go toward maintaining the common elements, contributions to the reserve fund, and services such as cleaning, building maintenance and management. Each unit's share is a percentage set out in the declaration, which may vary with the size of the unit, applied to the annual budget.

Because the amount differs from building to building and changes over time, this page gives no figures. Ask for the current budget and a written list of what the fee includes. Heat, water, hydro, internet and parking may or may not be covered, and the declaration and budget say which. Also ask whether the corporation has had to raise fees in recent years, and read the arrears section of the status certificate, since a high level of unpaid fees can signal trouble.

Declaration, by-laws and rules: pets, rentals and smoking

The CAO's buying a condo page says governing documents may contain restrictions on smoking, short-term rentals and pets. This is where you learn whether your dog fits, whether you could rent the unit while you travel, whether balcony smoking is allowed and what changes you can make to the unit.

Ask for the declaration, by-laws and rules and read them for:

• Pets: any limits on number, size or type
• Rentals: any minimum term or notice requirements, and any restriction on short-term rental
• Smoking and vaping, inside the unit, on balconies and in common areas
• Renovations: what needs board approval
• Any wording about residents' ages or who may live in the unit

That last item deserves care. Ontario's Human Rights Code protects against age discrimination in housing for anyone 18 or older, and the Ontario Human Rights Commission has said that no defence permits "adult lifestyle" housing that excludes children or people under a certain age. See the Commission's housing policy. If a declaration or listing mentions an age expectation, ask the corporation in writing how it works in practice and ask your lawyer for a view. Our page on adult lifestyle communities describes how local communities describe themselves.

The CAO and its Tribunal when something goes wrong

The CAO is the provincial body that works on condo governance and disputes, and it runs the Condominium Authority Tribunal. Its Tribunal page describes an online tribunal where the total cost is $200 ($25 to file, $50 for mediation and $125 for adjudication) and where you do not need a lawyer. The CAO site says which disputes the Tribunal can hear, so check there before assuming a problem qualifies. For anything involving a contract or money you have already paid, speak with your lawyer first.

Pre-construction condos and new home warranty

Buying from a developer before the building is finished is a different process from buying a resale unit. The CAO lists six documents a pre-construction buyer should receive: the pre-construction agreement of purchase and sale, the information sheet for buyers of pre-construction condominium homes, the condominium home addendum, the Tarion warranty information sheet, the disclosure statement and Ontario's residential condominium buyers' guide.

Tarion's new home warranty page says coverage includes protection before possession, such as for deposits and delayed closing, and protection against construction defects after possession, in periods of one, two and up to seven years. It applies to units built by an HCRA-licensed builder. Tarion lists a limit of $300,000 for condo units under its current terms, and a separate limit for common elements, so read the page for the current figures.

Have a lawyer review every pre-construction agreement before you sign, including deposit terms, closing dates, any right to cancel and the builder's rights to change the building. Do not rely on a summary on a website, including this one.

Elevators, parking and lockers: check before you fall in love

Downsizers often choose a condo for step-free living, and a few practical items affect that daily:

• Elevators: how many serve your floor, and what the budget and reserve study say about their repair or replacement
• Parking: whether your space is owned, leased or assigned, whether it is in the unit's title and whether visitor parking exists
• Lockers: the same questions, and where the locker is relative to your door
• Move-in rules: booking the elevator, deposits and hours
• Winter access: who clears walkways and parking areas, and how quickly

How parking and lockers are held, as a part of your unit or as common elements assigned to it, is a matter for the declaration and your lawyer. If it matters to your decision, ask for it in writing.

Questions to ask before you make an offer

• May I see the status certificate, the latest reserve fund study and the current budget?
• Have there been special assessments, and is another being discussed?
• What does the monthly fee include, and how has it changed recently?
• Is the corporation involved in any lawsuit?
• What do the rules say about pets, rentals, smoking and renovations?
• Is anything about the building scheduled for major work, such as the roof, elevators or garage?
• How are parking and the locker held, and are they included in the price?
• What does insurance on the building cover, and what must I insure myself?

Ask your lawyer about the last item. The status certificate includes insurance information, and your own insurer can tell you what a unit owner's policy needs to cover.

Where this fits in your plan

If you are deciding whether to buy before you sell, see buy first or sell first. For the cost side, Costs and Taxes covers Ontario land transfer tax, and the net proceeds calculator estimates what your sale leaves you before the next purchase. The step-by-step downsizing guide puts it all in order, and where to downsize compares Waterloo, Kitchener, Cambridge and the townships. Directories of lawyers and other help are on the resources page.

When you are ready to talk to someone, you can ask to be introduced to an agent on the eXp Realty operating team.