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Your condo status certificate is reviewed by the lawyers of potential buyers. A healthy certificate encourages people to sign on the dotted line. Therefore your condo board should know how to avoid the following status certificate red flags.
High or Rising Common Expenses
High or rising common expenses can discourage buyers on tight budgets. While you need to ensure you can cover maintenance, insurance, operational expenses, etc. lawyers look for signs you might not be the best at financial management.
One clue could be common expense fees that appear too high, or increase too often. Hence, you must ensure diligence in proper financial management to help keep common expenses manageable for the average condo owner. You can:
• Continue to meet your financial obligations
• Try to limit the number of special assessments you pass onto owners
• Be diligent in collecting unpaid common fees from each unit
• Keep tax payments up to date
• Be transparent with common expense increases
This helps provide reasonable rates that buyers can feel comfortable paying.
Unhealthy or Non-existent Reserve Funds
If you fail to properly allot a portion of the monthly common element fees towards the reserve fund, it falls short on the status certificate.
Lawyers look at the balance of your reserve fund. They also ensure you conduct reserve fund studies and review study findings. Therefore, to avoid this red flag your condo board should ensure:
• The reserve fund balance is higher than projected costs for the current fiscal year
• You show healthy trends in expenditures and receipts for previous years
• There’s a logical comparison between actual and expected costs
• You don’t find your reserve fund falls short to meet expected costs for repairs and replacements
• Reserve fund contributions align with required costs
• There aren’t constant increases to common fees to feed your depleted reserve fund
Since lawyers look for inadequacies in the reserve fund, the studies and failure to remedy issues, you should keep your reserve fund as healthy as possible.
Past and Current Legal Proceedings and Claims
A history of legal proceedings and claims against your Condominium Corporation never looks good. As a result, when reviewing your status certificate lawyers look for the possibility judgments might be divided among unit owners requiring a special assessment fee. Therefore, when possible, you want to limit legal actions.
However, another proactive approach is to take out an insurance policy to cover claims. Insurance shows it won’t affect common element fees or lead to a special assessment.
Outstanding Changes to the Common Elements
Incomplete proposed changes to common elements raise fears of fee increases. When proposed changes aren’t implemented, lawyers might suspect funds aren’t available. As a result, this could negatively affect common element fees.
Condo boards should always avoid common mistakes that reflect poorly on their ability to manage. During the review of your condo’s status certificate lawyers look for signs of poor financial management and failure to upkeep the condo property. These tips help keep your status certificate free of red flags, so you don’t discourage buyers.
At CPO Management we can assist your condominium in effective management to ensure your status certificates remain agreeable. For more information on our Toronto property management services contact us today.