What does a status certificate reveal about lawsuits involving my condo corporation?
The Condominium Act, 1998 requires that a status certificate disclose any actions or proceedings that are currently pending against the corporation or that the corporation is aware of and that could materially affect the corporation's finances. This is one of the most important disclosures for buyers to examine.
Active litigation could include construction defect claims against the developer, slip-and-fall liability claims in common areas, disputes with contractors over unpaid work, or inter-corporation boundary disputes in phased developments. If the corporation loses a major lawsuit, the resulting judgment may need to be paid through a special assessment on all unit owners.
The disclosure requirement covers known and pending matters, but does not guarantee the corporation is unaware of brewing disputes that haven't yet been formalized. Your lawyer reviewing the certificate and accompanying financial statements can flag whether there appear to be legal expense line items or reserve allocations suggestive of undisclosed matters.
Key takeaways
- The status certificate must disclose known pending or threatened litigation.
- Judgment losses on active lawsuits can translate into special assessments for owners.
- Construction defect, liability, and contractor disputes are the most common types.
- Your lawyer should review litigation disclosures carefully before the 10-day review period expires.