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When buying a condo as a re-sale, the pitfalls to avoid are slightly different compared with buying one new from a developer. Let’s look at the process first, so we can see where buyers are most commonly tripped up.
First, don’t be fooled by a status certificate that states that a unit has no arrears. A status certificate can only be guaranteed as 100% accurate at the time of it’s preparation. One minute later there could be one of many changes, such as a returned cheque. Most status certificates state that fees are paid up except for those that are not honoured by the bank. It would be prudent to verify with the condominium corporation whether or not there were any returned cheques after the status certificate was written up.
Second, ensure that the condominium corporation is indeed in a healthy financial position. A reserve fund of a million dollars does not mean “healthy” if there are repairs required that cost one and a half million dollars. This situation is not altogether impossible. Ask the condominium corporation if they have any major repairs or assessments planned, for example lobby renovations or wheelchair accessibility retrofitting. Also make sure to ask if the condominium corporation is currently involved in any lawsuits.
Make sure the rules of the condominium corporation fit with your lifestyle. This comes back to understanding how condominiums work. Don’t rely on a lawyer or real estate agent to fill you in on this (because they might not!), make absolutely sure you read the status certificate and condominium corporation’s declaration yourself. What is their policy on pets? Rules banning pets, or pets larger than a certain size, catch many new owners by surprise. What about parking? Does your unit only come with a single parking space, but you have two vehicles? The condominium community, not just the unit itself, has to be a good match for you.
All too often, purchasers ecstatically move into their condominium, only to discover that something that they paid for has been removed. Don’t hesitate to ask for any promises to be sent to you in writing! One example we’ve seen was a hot tub on the balcony for which the purchaser paid an extra $20,000. In some cases the previous owner may have removed it, even though they charged you for it. In other cases, perhaps the hot tub will be removed by the condominium corporation because its installation was not authorized by the Board of Directors.
Just like we said last week when we talked about buying a condo new from a developer, condominiums are an excellent form of ownership, and can be an excellent investment, but as with everything else it’s critical that you do your homework and buy smart! There’s nothing worse than buyers remorse. Ask the questions, invest the time in learning how things work, and you may find yourself looking back on one of the best decisions of your life.