Introduction
Purchasing a condominium can be an exciting and rewarding experience. However, before you can move in and start enjoying your new home, there are several permits and approvals required by law. Navigating the condo approval process can seem daunting, especially if you’re a first-time buyer. This comprehensive guide will walk you through the key permits and approvals needed for condos, so you can breeze through the paperwork and start settling into your dream home.
Overview of Common Condo Permits and Approvals
Here are some of the most common permits and approvals required for condominium purchases:
Status Certificate
Also known as an Estoppel Certificate, this document is issued by the condo corporation and provides important details about the building and corporation finances. It discloses facts like monthly fees, pending lawsuits, reserve fund status, and more. Status Certificates are mandatory for all condo sales in most provinces.
Declaration, Bylaws, and Rules
These condo corporation documents outline the governance structure, responsibilities, rights, and obligations for owners, tenants, and the board. Purchasers should review them to understand the condo lifestyle.
Financing Approval
If you’re obtaining a mortgage, the lender must approve financing based on factors like your income, credit, down payment amount, and the property value. Conditional approval is common initially.
Condo Board Approval
The condo board or property manager must approve the sale and transfer of ownership before closing. This involves verifying aspects like status certificate accuracy.
Insurance Approval
Your lender will require proof of adequate homeowners insurance for the property before releasing funds. Inform your insurer about the condo corporation’s insurance to avoid gaps in coverage.
Detailed Look at Key Permits and Approvals
Now let’s explore the major condo permits and approvals in more depth:
The Status Certificate
The Status Certificate, also called an Estoppel Certificate, discloses important details about the condo’s financial and operational status. It is issued by the condo corporation and enables buyers to make informed decisions.
Here are some key facts provided in a Status Certificate:
- Common expenses: Details on regular condo fees, special assessments, unpaid amounts owing, and payment frequency. This impacts your monthly housing costs.
- Reserve fund status: An indication of whether the reserve fund is adequately funded to cover major repairs and replacements. Underfunded reserves may require special assessments.
- Legal proceedings: Disclosure of any lawsuits, arbitrations, mediations or other legal action involving the condo corporation. This highlights potential financial risks.
- Insurance summary: An outline of the corporation’s property and liability insurance policies and coverage amounts. Spot gaps in coverage you may want to address.
- Utilities: Facts on which utilities like water, heating, and electricity are paid by owners directly versus included in common fees.
- Rental restrictions: Rules on rentals, like rental caps and tenant screening requirements. Consider if you may want to rent your unit out.
- Facilities: Details on amenities like parking, pools, gyms, and party rooms. Assess if the facilities suit your lifestyle.
- Maintenance and repairs: An overview of who is responsible for repairs to units, common elements, and exclusive-use areas. This shapes your maintenance obligations as an owner.
- Board details: Names and contact information for the condo board members. Learn who governs the community.
The Status Certificate provides a snapshot of the condo’s health on the certificate date for buyer awareness and disclosure purposes. Requirements vary slightly by province, but Status Certificates are mandatory for resale condos in most of Canada.
As a buyer, review the Status Certificate closely and follow up on any areas of concern. Also confirm all finishes and amenities described match the actual property condition.
Condo Documents – Declaration, Bylaws, and Rules
In addition to the Status Certificate, condo buyers must also review the key condo corporation governing documents:
- Declaration: This legal document establishes and describes the condo corporation when the building is first constructed. It outlines important aspects like unit boundaries, ownership structures, resource percentages, and maintenance responsibilities.
- Bylaws: The corporate bylaws provide the ongoing rules, processes, and procedures for governing and operating the condo. Bylaws cover topics like board elections, voting, rule-making, financial management, owner rights and obligations.
- Rules: These are specific rules enacted by the board to address unique issues in the community, like noise, pets, parking, and conduct. Rules must align with the declaration and bylaws.
These documents dictate the rights, responsibilities, and limitations on owners living in the community. They address important considerations like:
- Noise restrictions and quiet hours
- Pet policies
- Rental allowance and restrictions
- Parking allocation and restrictions
- Insurance obligations
- Maintenance and repairs of units and common elements
- Alteration approvals processes
- Moving procedures
- Waste disposal and recycling
- Guest and visitor policies
- Code of conduct and conflict resolution
- Elections, voting, and decision-making procedures
Review these documents thoroughly to ensure you can comply with the lifestyle framework and avoid future surprises or conflicts. Also consider if the board structure/rules suit your needs or may cause frustrations down the road.
Obtaining Condo Board Approval
Before the condo sale can close, the condo corporation board and property management must provide final approval and transfer authorization. Here is the typical condo board approval process:
Condo board notification – The seller must formally notify the board of the sale and provide the buyer’s details so the transfer request can be processed.
Status certificate review – The board or manager will review the Status Certificate to ensure all information is still accurate and no new issues have arisen.
Owner verification – The buyer will be required to provide identification and personal information to verify legal ownership.
Move-in procedures – Any move-in rules, instructions, forms, deposits, or fees will be communicated. Elevator booking and insurance requirements may be needed.
Approval issuance – With everything in order, the board will issue formal approval for the ownership transfer to proceed. This may be contingent on closing and legal transfer.
Title transfer – After closing and legal title transfer, documentation must be submitted to the board for their records. The new owner will be added to correspondence and given access credentials.
New owner orientation – Many boards will provide new owners with an orientation package covering important documents, contacts, procedures, and next steps.
Board approval offers one final validity check before closing. If any red flags arise, buyers can go back to the seller for resolution or walk away. This protection is why condo approval is so crucial. Don’t finalize legal transfer until board approval is secured.
Financing Approval from Your Lender
If obtaining a mortgage, you’ll need to secure financing approval from your chosen lender before closing. Here’s an overview of the financing approval process:
Mortgage pre-approval – Get pre-approved for a mortgage early in the home buying process. This indicates how much you can borrow and strengthens purchase offers.
Submit loan application – After having an offer accepted, you submit a full mortgage application with all required documents to confirm details and eligibility.
Income and down payment verification – Lenders will verify your income, assets, downpayment funds, and other application details to approve financing. Sourcing records helps this run smoothly.
Appraisal and property valuation – The lender will evaluate the property through an appraisal to affirm its value supports the purchase price and mortgage loan amount.
Credit check and debt evaluation – Your credit score and total debts are reviewed to analyze overall borrowing risk and capacity. Minimum score thresholds often apply.
Conditional approval – If everything checks out, the lender provides a conditional approval. This states financing terms and subjects that must be satisfied before closing.
Firm approval – As closing nears, the lender issues a firm approval after all conditions are cleared. This guarantees funding up to a specified mortgage amount.
Funding – On closing day, the lender provides the mortgage funds to complete purchasing as long as you’ve fulfilled all requirements.
Getting financing approved early provides certainty the funds will be there on closing day. Be thorough in submitting all required documents and follow up diligently to satisfy any conditions so the lender can transition from conditional to firm approval seamlessly.
Home Insurance Considerations
Purchasing adequate home insurance is another key requirement for condo buyers. Consider the following insurance tips:
- Review condo corporation policies and exclusions to avoid gaps in coverage.
- Inform your insurer about the building’s deductibles to match or exceed them.
- Consider coverage extras like loss assessment, betterments/improvements, and condo owner liability.
- Get quotes from multiple providers – condo policies vary widely in cost and coverage.
- Look into bundled discounts if insuring multiple properties or obtaining auto insurance too.
- Aim for at least $2 million in liability coverage – lawsuits are common.
- Review policy limits against your unit’s reconstruction value – don’t risk underinsurance.
- Provide the certificate of insurance to your lender as soon as possible to satisfy mortgage requirements.
Your closing date will not be scheduled until home insurance is arranged and documentation provided. Start the application process 4-6 weeks prior to your desired closing date so there’s adequate time for insurer approval.
FAQs on Condo Permits and Approvals
What permits and approvals are required when purchasing a condominium?
The main permits and approvals required are the Status Certificate, condo documents, condo board approval, financing, and insurance. Environmental approvals may also be needed for new constructions.
Who provides the Status Certificate?
The Status Certificate is prepared and issued by the condo corporation’s board of directors or property management company. It discloses details on finances, bylaws, facilities, legal proceedings and more.
Can I waive review of the condo documents?
No, reviewing the declaration, bylaws and rules is essential to understand your rights and obligations as a condo owner. You will be bound by these documents so cannot waive reviewing them.
How long does condo board approval take?
The condo board approval timeline can range from 3 days to 3 weeks. Quick turnarounds are more common for established condos with streamlined processes. New constructions or combative boards may result in longer timelines.
Can I get my down payment back if condo board approval is denied?
Your offer deposit would be refunded if board approval is denied. However, your down payment funds are not provided until closing, after approvals are already complete. There is no down payment to recoup if approval is denied beforehand.
Does my condo purchase depend on financing approval?
Yes, receiving financing approval from your lender is mandatory. The lender must issue an unconditional mortgage commitment before the deal can close. Purchasing without formal financing in place is extremely high risk.
What happens if my condo application is declined by insurers?
If declined by multiple insurers, you may need to review risks with your lawyer and lender to see if there are ways to obtain coverage. Proceeding without proper insurance may not be possible.
Key Takeaways
- Major permits and approvals for condos include Status Certificates, condo documents, financing, insurance and condo board approvals.
- Review Status Certificates and condo documents thoroughly to avoid surprises about fees, restrictions, maintenance and more after moving in.
- Start the insurance application well in advance to identify and resolve any approval issues before closing.
- Conditional lender approvals should be converted to firm commitments prior to closing to guarantee financing.
- Condo board approval takes time, so build this into timelines and don’t finalize transferring ownership before approval is secured.
- Permits and approvals are mandatory processes designed to protect condo buyers – embrace them as an opportunity to validate the purchase.
Conclusion
The condo approval process may seem intimidating at first, but is quite straightforward once you understand the key requirements. Proactively learning about each permit, timeline and document will help your condo purchase stay on track. Leverage this guide to breeze through condo approvals and start enjoying your new community sooner!