I plan to buy a condominium. What is an estoppel certificate?
An Estoppel Certificate is a document that reveals analytical information regarding the financial, legal, and management aspects of a condominium corporation, as well as, a specific unit of the condominium corporation. When an estoppel certificate is prepared it identifies the expense obligations of that specific unit, and the overall legal and financial health of the condominium corporation.
An estoppel certificate is deemed accurate as of the day it is prepared. The legislation states that as of the date issued, the estoppel certificate is conclusive proof of the financial, legal, and managerial status of the specific unit and condominium corporation as a whole. Therefore, estoppel certificates provide additional consumer protection for condo buyers. The information provided cannot be revoked, confirms the relative value of a property, and is especially important for resale units.
What are the requirements of the New Brunswick Condominium Property Act?
The New Brunswick Condominium Property Act, Chapter C-16.05, effective January 1, 2010, states that all estoppel certificates must be issued using Form 14, otherwise the estoppel certificate is in violation of the legislation. A blank, form-fillable copy of Form 14 is available on this website, under the tab Forms and Documents or click on the blue link above.
Estoppel certificates are to include current registered copies of the condominium corporation’s Declaration and By-Laws (including the Common Element Rules). These are the governing documents and explain what a condo owner’s rights and obligations are. A copy of the Reserve Fund Study, if applicable, is also to be attached. Estoppel certificates are to be issued within 10 days. The condominium corporation may charge a reasonable fee for the preparation of estoppel certificates and copying of the additional documents.
What happens if material is omitted or estoppel certificates are not supplied?
If material is omitted or a certificate is not prepared, the Act in Section 51(6) states that “it shall be deemed to include a statement that there is no such information”. Likewise, if a corporation does not issue an estoppel certificate within the required time, “it shall be deemed to have issued a certificate on the day immediately after the required time has expired”. In effect, this means the condominium corporation’s board has no plans for condominium fee increases, has not levied any special assessments, and that the current owner is not in default of any common expenses (condo fees, special assessment, or fines).
What is the purpose of using Form 14 to prepare an estoppel certificate?
Estoppel certificates reveal the financial, legal, and management history of the corporation. It will also identify what insurance coverage protects the property and if there are any planned changes to the Declaration or By-laws. Any changes in the governing documents could make the property less attractive to a buyer, so it’s important to be aware of any proposed changes.
- The information contained in estoppel certificates is legally binding. For example, unless identified in the estoppel certificate, the condo corporation cannot increase condo fees and say that it was overlooked.
- If the estoppel certificate reveals that the current owner is in arrears for common expenses, the buyer can have these arrears deducted from the purchase price.
- Form 14 provides consistency of information, ensuring that all of the details of the corporation and the specific unit are revealed. This helps make comparisons easier for buyers.
- The information provided in Form 14 helps mortgagees by providing consistent information. It also demonstrates what a reliable document looks like.
Who prepares estoppel certificates?
- Condominium Corporations can prepare their own estoppel certificates
- Condo-Link Services Incorporated: 506-206-2080 or email@example.com
- Management Companies acting on behalf of condominium corporations
Although estoppel certificates can be prepared by a number of parties, it is important that the duly-authorized officers of the condominium corporation sign the certificate. They are ultimately responsible and should be the ones to sign as indication that all of the information is accurate. Typically it is the President and Treasurer who sign.