It seems like every day there are new developments with regards to how businesses and the public should operate in this new age of COVID-19. On March 23, 2020, Doug Ford announced that only essential businesses will be operating for the next fourteen days, but that this period may be extended.
Many real estate services were deemed to be essential, and unit sales have not yet seen a decline. Thus, a question that has arisen amongst condominium corporations is what – if anything – should be included on the status certificate as it relates to COVID-19?
It is still too early to say how far-reaching the negative effects of COVID-19 will be on the economy. It has certainly put an immense amount of financial strain on many Canadians. While the government has provided some relief with regards to mortgage payments, there has been no legislation providing aid for condominium owners who have the additional obligation of common element payments.
No one is able to say for sure how long Canadians will be dealing with COVID-19. Many are saying that the economic hardship will get far worse before it gets better. How will this impact condominiums financially, and what needs to be disclosed to potential purchasers?
There is a possibility that corporations will face unexpected deficits in the budget, as COVID-19 has led many corporations to increase their cleaning regime, upping operating costs. When preparing a status certificate, corporations should make sure to note a potential deficit if they anticipate one.
Corporations should also be sure to maintain their reserve funds in accordance with their plan for future funding. If a corporation is experiencing a deficit in the operating budget as a result of increased expenditures arising from COVID-19, the reserve fund cannot be used to offset the operating deficit, or to provide a “grace period” to offset common expenses.
Some Corporations may experience delays with carrying out an upcoming on-site or comprehensive reserve fund study as a result of the health and safety concerns relating to COVID-19. If the corporation is going to miss its three-year deadline to complete a new study, this should be noted in the reserve fund section of the status certificate with the appropriate wording about possible changes to contributions.
Remember – status certificates are binding on the corporation. When in doubt, be sure to have legal counsel review the status certificate before distributing it to potential purchasers, so as to minimize any exposure to risk during these uncertain times.
