Disclosure statements, what are they?

HP writes Hi Paul:

We are looking at purchasing a condo, but we are a bit confused over two documents we have heard about. The first one is called the  Disclosure Statement by Seller and the other Disclosure Statement by Condominium Corporation. Can you explain these to us in simple terms?

Paul replies:

Dear HP: I understand how you can easily get confused by the number of different types of documents that are involved in property purchases in general and condominiums in particular. The first document, the Disclosure Statement by Seller is a brief outline (6 pages) that the Seller must provide to the purchaser listing any special considerations that may affect the property from the Seller’s point of view. The items are fairly standard and, in most instances, do not cause concern. It covers the Seller’s contact information, the type of condominium (e.g. multi-unit, bare-land), parking, use of common elements, percentage ownership in the condominium corporation, and percentage voting rights. Your real estate agent and a lawyer should answer your questions if you have any.

According to the Act, the seller certifies that the information in this disclosure statement including the attachments is accurate as of the date the statement is given to the buyer.

The second, and in my opinion, the more important of the two documents is the Disclosure Statement by the Condominium Corporation.  This document  (15 plus pages) contains all the details of the development. It contains a description of the property, financial matters such as parking, utilities, lockers, documentation charges, whether or not the corporation is audited, the status of the reserve fund, the declaration, bylaws and rules, management of the property, insurance coverage, outside contracts, voting rights, legal actions for or against the corporation, changes to the common elements, and more. The corporation may charge a fee for the preparation of this statement.

The Regulations under the Condominium Act state: It is recommended that before the closing date of the agreement of purchase and sale, the buyer of a unit obtains a status certificate from the condominium corporation. A status certificate will show if the unit owner owes any money to the condominium corporation or is in breach of the declaration, by-laws or rules. This disclosure statement, including the attachments, must be signed not more than 90 days before the seller gives it to the buyer. The condominium corporation certifies that the information is accurate as of the date of this statement.

Note: Given that condominium corporations are dynamic and matters can change quickly, the purchaser should ensure that the Disclosure Statement by the Condominium Corporation is indeed no older than 90 days.

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