A Document Review is the collection of information and data by reviewing the existing governing documents of a condominium corporation. In New Brunswick, the documents used for this purpose include the New Brunswick Condominium Property Act; and the condominium corporation’s registered Declaration, By-Law, Plan, and Common Element Rules.
As well, any other relevant documents, including financial statements, minutes of general meetings, an Estoppel Certificate, and Reserve Fund Study can be included. These give more detail on the current status of the condominium corporation and the specific unit being considered.
A document review will include a description of the condominium corporation complex and identify the type of development. Some condo corporations are developed in a phased style. This means the building you are considering may have additional buildings added in the future.
The management style may be of interest to potential owners. A Document Review should outline the style of management, the name of the management company (if applicable), and any potential changes that are being considered. The history of management and the role of the Board of Directors may reveal a sense of whether or not the complex is well maintained.
A Reserve Fund is a special fund established to cover the future costs of major repairs and replacement of the common property. Reserve Funds contributions are funded by condominium fees. Reserve Funds are now required under New Brunswick legislation – Section 38(2).
A Reserve Fund Study is a financial document that serves the purpose of providing cost estimates for various future, major repairs or replacement of the property. It also provides current estimates for funding these repairs and replacements in accordance with the NB Condominium Property Act. A Document Review will identify whether or not the Reserve Fund Study is up-to-date, as mandated by the Act. It should also indicate what the Reserve Fund Study recommends as the annual contribution to the Reserve Fund and what the current Reserve Fund balance should be.
The By-Law will describe when and how financial statements are distributed to owners. It is important for owners to know and understand whether or not the condominium corporation has a healthy financial position.
A Document Review will identify the rules that must be adhered to by owners and their guests. Rules relate to smoking, pets, parkings, and a myriad of other issues for living in a shared community. Some condo corporations allow pets and others do not or have restrictions. As well, a Document Review will determine what parking is available, what parking is for the exclusive use of a particular unit, and if there are any additional fees for parking.
Current amounts for condominium fees for the unit you are considering will be identified. This amount includes all costs, including contributions to the Reserve Fund. As well, if fee increases have been discussed or are under consideration by the Board, they are to be revealed in the estoppel certificate.
If a condominium corporation has a shortfall in the operating budget or Reserve Fund, or unforeseen expenses occur (dramatic increase in utility rates), there will be a need to increase unit owners’ contributions. This could be in the form of increased condominium fees or a special assessment fee. A Document Review can reveal whether a special assessment for the unit in question has been paid or whether or not a special assessment is being considered.
Any lawsuits or potential lawsuits must be revealed as required under the Act. Lawsuits could signal the need for a special assessment, but not always. A Document Review can explain the nature of the lawsuit, the status of the lawsuit, and potential risks.
A Document Review can also uncover any legal issues related to the unit being considered. If the unit is in arrears, there may be a potential legal action by the condo corporation. Or, the potential buyer could deduct the amount of the arrears from the purchase and sales agreement.
A Document Review will confirm that the condominium corporation carries an insurance policy to cover the complex – Section 50(1) of the Act. This should include the structure, the common elements, the property, the equipment (HVAC system, elevator, etc.) and the units. It also includes personal liability and directors and officers coverage. The policy coverage should be for replacement value, as mandated by the New Brunswick Condominium Property Act. Premiums for the corporation insurance policy are paid from the budget, which is funded by condominium fees.
How utilities are paid varies greatly among condominium corporations. So a buyer cannot assume that how utilities are handled in one condominium will be the same in all condominiums. A document Review will outline which utilities are paid by the condominium corporation and which are the responsibility of the unit owner.
Common Elements are the parts of the corporation that are shared and co-owned by a unit owner. The Document Review will describe what amenities are available for residents to use. These may include a fitness room, swimming pool, social room, and library, to name only a few.
The Document Review will also identify whether or not there are fees associated with the use of these facilities. For example, some condos will charge for the use of a common room when an owner wishes to use it for a private party. As well, additional parking spots or additional storage lockers are sometimes available for rent by residents.
Some condominium corporations have certain Common Elements that are for the exclusive use of a particular unit owner. A Document Review will determine what Exclusive-Use Common Elements apply for the unit being considered. Exclusive-Use means the unit owner has a RIGHT to this Common Element which cannot be revoked, without the owner’s express permission and a change in the Declaration. So Exclusive-Use Common Elements transfer to the next owner when the unit is sold.
A Document Review can also include whether or not this corporation is a member of the New Brunswick Chapter of the Canadian Condominium Institute. CCI provides education and advocacy to members. CCI offers training and education and resources for member condominium corporations. CCI also provides the same opportunities to all condominium owners of member condominium corporation. Access to resources and the CCI website, including the members-only sections is with a login and password made available to member condominium corporations.
Need more information? Contact Condo-Link Services for complete details on Document Review Services. Call 506-206-2080 or email firstname.lastname@example.org
The New Brunswick Condominium Property Act: http://laws.gnb.ca/en/showdoc/cs/C-16.05