Real Estate Law: Condominium Purchase- New vs. Resale

A newly constructed condominium can be an attractive option for a prospective purchaser as it provides the purchaser with all the benefits of a newly constructed building, including but not limited to, the fresh appearance of a new building, latest chattels such as the latest appliances, modern lobby and elevators, while at the same time, providing the purchaser an opportunity to customize his or her respective unit.

A prospective purchaser can purchase a new condominium from the developer either before or during the construction phase of the building and certainly well before the condominium corporation has been formed OR the developer may have some unsold units available even after the condominium has been completed and registered.

Advantages of purchasing a new condominium:

• Depending on the state of the market conditions, a lower purchase price.


• Potentially more choices in terms of unit location within the desired building.


• A broader range of options and/or upgrades available. Negotiate with the builder. They want your business, and may be willing to provide you with certain free or reduced upgrades to entice you to purchase from them.


• New home warranty protection through Tarion.


• As a general rule, newer buildings have less risk of having to undergo costly, noisy and intrusive repairs and renovations.

Disadvantages of purchasing a new condominium:

• As the construction may not have begun, you may be purchasing based on artist sketches and floor plans which may be subject to change; hence, you cannot physically see what you are purchasing.


• Your initial deposit will be tied up for the duration of the construction.


• Expect delays. In all likelihood, the construction of your unit may not be completed by the expected date.


• You may be required to move into your unit as part of your interim closing while construction continues in the building with respect to the other units and/or common elements. This can be noisy and disruptive.

Real Estate Law: What is a Status Certificate?

The status certificate is a document that provides a report on the current status of the condominium corporation. The status certificate package includes a number of items, including the condominium declaration, by-laws, reserve fund, budget, condominium insurance details, management contract(s), minutes of the last annual general meeting and mention of any lawsuits involving the corporation, if any.

The full details of what the status certificate is to contain has been produced for the reader below as per Section 76(1) of the Condominium Act.

What you need to know:

• A status certificate and estoppel certificate are one and the same document. A status certificate was previously referred to as an estoppel certificate.

• The status certificate can be, more or less, ordered by anyone so long as the request is made in a writing together with the proscribed fee as per Section 76(2) of the Condominium Act. The maximum fee for the status certificate is $100.00 including taxes.

• Section 76(3) of the Condominium Act provides that the corporation shall prepare and provide the status certificate within 10 days following receiving a) a request for it and b) receiving payment of the aforementioned fee charged by the corporation.

• The purpose of the status certificate is to allow a potential buyer of a condominium unit the opportunity to have as much information as possible about their unit as well as the fiscal situation of the building in general. For example: 1) whether any major work is to be done to the building 2) whether or not there are any arrears or increases with respect to the common expenses 3) the amount of the reserve fund and whether the reserve fund is adequate for any major work 4) whether there are any claims against the corporation or whether the corporation is involved in any legal proceedings.

• If you are buying a resale condominium, it is extremely important to insure that the agreement of purchase and sale is conditional upon the review of the status certificate by your lawyer.

• The status certificate allows the potential buyer to review and investigate the condominium rules, including for example, to investigate whether a pet is allowed.

Section 76(1) of the Condominium Act:

(a) a statement of the common expenses for the unit and the default, if any, in payment of the common expenses;

(b) a statement of the increase, if any, in the common expenses for the unit that the board has declared since the date of the budget of the corporation for the current fiscal year and the reason for the increase;

(c) a statement of the assessments, if any, that the board has levied against the unit since the date of the budget of the corporation for the current fiscal year to increase the contribution to the reserve fund and the reason for the assessments;

(d) a statement of the address for service of the corporation;

(e) a statement of the names and address for service of the directors and officers of the corporation;

(f) a copy of the current declaration, by-laws and rules;

(g) a copy of all applications made under section 109 to amend the declaration for which the court has not made an order;

(h) a statement of all outstanding judgments against the corporation and the status of all legal actions to which the corporation is a party;

(i) a copy of the budget of the corporation for the current fiscal year, the last annual audited financial statements and the auditor's report on the statements;

(j) a list of all current agreements mentioned in section 111, 112 or 113 and all current agreements between the corporation and another corporation or between corporation and the owner of the unit.

(k) a statement that the person requesting the status certificate has the rights described in subsection (7) and (8) with respect to the agreements mentioned in clause (j);

(l) a statement whether the parties have complied with all current agreements mentioned in clause 98(1)(b) with respect to the unit;

(m) a statement with respect to,

(i) the most recent reserve fund study and updates to it;

(ii) the amount in the reserve fund no earlier than at the end of a month within 90 days of
the date of the status certificate, and

(iii) current plans, if any, to increase the reserve fund under subsection 94(8);

(n) a statement of those additions, alterations or improvements to the common elements, those changes in the assets of the corporation and those changes in a service of the corporation that are substantial and that the board has proposed but has not implemented, together with a statement of the purpose of them;

(o) a statement of the number of units for which the corporation has received notice under section 83 that the unit was leased during the fiscal year preceding the date of the status certificate;

(p) a certificate or memorandum of insurance for each of the current insurance policies;

(q) a statement of the amounts, if any, that this Act requires be added to the common expenses payable for the unit;

(r) a statement whether the Superior Court of Justice has made an order appointing an inspector under section 130 or an administrator under section 131;

(s) all other material that the regulations made under this Act requires.

Real Estate Law: Joint Tenants vs. Tenants in Common

If more than one individual will be registered on title, you should consider whether you would like to register the transfer/deed as joint tenants or as tenants in common. The following definitions are provided to assist you:

Joint Tenant

Joint tenancy ensures that on the death of either of the joint tenants ownership goes to the surviving tenant. Interest in a property owned under joint tenancy cannot be willed to a third party or encumbered or disposed of by one or other of the owners without the consent of the other.

Where one of the "joint tenants" dies, the surviving joint tenant(s), usually automatically, becomes the owner(s) of the property no matter what a Will might state. This is the matter of holding title most commonly used by spouses.

Tenants in Common

There are no rights of survivorship in this type of ownership, therefore the interest in the property does not terminate on death. Each tenant holds an undivided interest in the property and can dispose of this interest by Will or other means.

Under this type of ownership, each owner's share can be different (e.g. A owns 80% and B owns 20%).

Real Estate Law: Non-resident Vendor

There are certain legal and accounting issues that arise when a non-resident of Canada sells property in Canada. These issues are set out below.

There are no restrictions for a non-resident purchase, nor are there tax implications or extra fees payable. A non-resident may purchase as many properties as they wish. Tax issues may arise on the holding of property by non-residents. Non-residents of Canada are subject to tax on various kinds of income paid to them, including rental income. If you are a non-resident and are renting property in Canada, a tax return must be filed each year.

The Income Tax Act (ITA) of Canada provides that whenever a non-resident disposes of property, the non-resident is required to pay the appropriate amount of taxes on any gain. In order to satisfy the purchaser that the appropriate amount of taxes are being paid, the vendor must provide to the purchaser, on or before closing, a clearance certificate from Revenue Canada. This certificate is issued by the federal government and certifies that a certain amount of money is payable for the taxes. The amount owning is deducted from the sale proceeds and sent directly to the federal government by the vendor's lawyer.

The clearance certificate is issued pursuant to Section 116 of the ITA and is usually required on the closing date. It may be applied in advance of the closing by the vendor, but not until there has been a contract of purchase and sale entered into by the vendor, with all subjects being removed. The wait for the clearance certificate is usually around 6-8 weeks, so in a perfect world, there would be enough time in a 6-8 week lead-time between when the subjects are removed and the completion date.

If the certificate is not obtained prior to the closing date, the purchaser is required to holdback from the sale proceeds a percentage of the selling price. This percentage is either 25% or 50% depending on whether the property is non-depreciable property (a residence of the vendor) or depreciable property (the property has been rented). The transaction closes with the money remaining in a lawyer's trust account until the certificate is obtained. Once the certificate is obtained, the taxes are paid from the holdback and the vendor receives any left over.

Please note that the holdback is based on the selling price, not the equity in the property. If there is financing on the property, the vendor may need to pay this financing from other sources.

The courts have held that an individual is "ordinarily resident" in Canada for tax purposes if Canada is the place where the individual, in the settled routine of his or her life, regularly, normally or customarily lives. In making a determination of residence status, all of the relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intention and continuity with respect to stays in Canada and abroad.

COMMENT: Please be advised that the ITA frequently changes and that there are often new cases dealing with the issues set out above.