Condominiums - Insurance and Estoppel Certificate

If you are purchasing a condominium, the condominium corporation will (except in rare circumstances) provides insurance for the building itself. It is your responsibility to obtain condominium owner’s insurance. This will cover the following three issues that are not covered by the condominium building insurance:

  1. All your contents and personal belongings.
  2. Liability insurance.
  3. The condominium corporation insurance only covers the basic building.       

It is your responsibility to provide your own coverage for any enhancements that have been made to the unit.                                                                                                                                                                                                 

Estoppel Certificate

The standard REPC requires the seller to provide you with an Estoppel Certificate. The Estoppel Certificate indicates, among other things, whether or not the condominium fees are paid up to date. All major lenders require an Estoppel Certificate prior to funding the mortgage. This certificate will also show whether a special assessment has been levied against the condominium which has yet to be paid. It also contains a statement as to whether there are any structural deficiencies in the condo buildings.

Condominium Document Review

Prior to removing all conditions on the condominium purchase, you will want to review a package of condominium documents. This includes the reserve fund study, minutes of recent board and shareholders meetings, and the Bylaws along with the financial statements. There are several issues to focus on. Look at the Bylaws to see if there are any restrictions on the use of the property that you find objectionable. Compare the financial statements with recommendations in the reserve fund study to make sure the condominium is setting aside enough money for future repairs. In the absence of this, you may be facing a special assessment. Review the minutes of directors and shareholders meetings to see if there any ongoing issues regarding items such as major repairs or difficult occupants in the unit right next to the one you are looking to buy. You can review these documents with the assistance of your realtor. If you have never purchased a condominium before, you can obtain the service of a professional who will review the condominium documents on your behalf at your cost. By the time we receive the REPC, conditions have been removed and it is too late to back out of the deal if there is something objectionable in the condo documents. Reviewing condo documents includes reviewing items such as financial statements which is outside our skill set. We do obtain and review the estoppel certificate.