Status certificates: Providing adequate disclosure

February 13, 2024 | Justin McLarty

As consumer protection legislation, one of the key safeguards that Ontario’s Condominium Act, 1998 (the “Act”) provides to prospective purchasers is the ability to request a status certificate. A status certificate lays out the nuts and bolts of the inner workings of a corporation to a purchaser, giving them key information on the financial health and overall management of that particular condo.

Condo corporations need to prepare status certificates carefully, otherwise there is a risk of financial exposure when there are future plans to increase common expenses or levy a special assessment. This risk is illustrated by the decision in Bruce v. Waterloo North Condominium Corporation No. 26, 2023 ONSC 2995 (“Bruce”).

In Bruce, the plaintiff unit owner had requested a status certificate before purchasing a unit in the corporation. The status certificate stated that “the Corporation has no knowledge of any circumstance that may result in an increase in the common expenses for the unit…”

In fact, the Corporation knew at the time that the status certificate was issued that there would be significant costs incurred in the near future to replace its water main and lift station. Shortly after closing, Mr. Bruce learnt that the costs to replace the water main and lift station would cost $2.5 million and a special assessment would be levied against all owners to pay for the replacement.

Mr. Bruce disputed his responsibility to contribute to the special assessment, as the status certificate that was issued to him did not adequately disclose the forthcoming replacement of the water main and lift station.

The corporation’s defence mainly centred on the fact that an auditor’s report that was included as an attachment to the status certificate stated that the corporation had tendered a water main replacement project and a special assessment may be needed to fund that project.

The court firmly rejected that argument. The court held that there needs to be clear and adequate disclosure of the existence of any potential major projects that would likely result in the need to levy a special assessment against the owners. In practice this means that a statement should  be included in both paragraphs 11 and 12 of the status certificate that:

  • Clearly identifies the project that a special assessment may or will be levied for; and
  • The anticipated amount of that special assessment, both the total amount and the amount attributable to the unit that the status certificate is being issued for.

A failure to make a clear and adequate disclosure can have serious financial repercussions for the corporation. In Bruce, the court found that the new owner was not obligated to contribute to the special assessment, as it was not properly disclosed in the status certificate. Mr. Bruce’s approximately $34,000.00 share of the special assessment accordingly had to be paid for by all of the other owners of the corporation.

The decision in Bruce illustrates the need to make clear and fulsome disclosure of the financial health of the condo corporation. A failure to do so, especially when there is an expensive project on the horizon, ultimately can cost all other owners a significant sum of money.

The best practice is to disclose early and often. The point of a status certificate is to inform potential owners of the financial health and outlook of the corporation. There is little to be gained by failing to disclose forthcoming projects, as owners will learn of the costs entailed sooner or later.

Should you have any questions, please do not hesitate to reach out to a member of Miller Thomson’s Condominium & Strata group.


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