Documents to Review Before Buying a Condo in New Brunswick

A condo is not just a unit. You also take on a share of a shared building, a set of rules and a financial relationship with the condominium corporation. The paperwork tells you what you are really agreeing to.

Ideally you review these documents before your offer becomes firm, or you make the offer conditional on reviewing them. This article explains what to ask for and what to look for in New Brunswick.

This article covers the law of New Brunswick.

Why the documents matter

Condominiums in New Brunswick are governed by the Condominium Property Act, which is administered by Service New Brunswick through a Director of Condominiums. The Act sorts condominium property into commercial, residential, bare-land, mixed-use or phased-development types, so first confirm which kind you are looking at.

Each owner must comply with the Act, the declaration, the by-laws and the rules, and the corporation must take reasonable steps to make sure owners comply. If you plan to rent the unit out, a tenancy agreement is treated as including a covenant by the tenant to follow the Act and the corporation's governing documents.

The core documents to request

• The declaration, which sets out how the property is organized and how common expenses are shared.
• The by-laws and any rules the corporation has adopted.
• The current annual operating budget and the most recent financial statements.
• The reserve fund balance and the latest reserve fund study.
• Minutes of recent owners' and board meetings.
• A statement of the monthly fee for the unit and any unpaid amounts owing on it.
• Details of any lawsuits, special assessments or major repairs planned or under discussion.
• Insurance information for the building.

The corporation is created on registration of the declaration, and its job is to manage the property and assets of the corporation. By-laws must be consistent with the Act and the declaration, and they can be amended by owners holding at least 60% of the common elements. That means the by-laws you read today can change after you buy.

Fees, liens and the reserve fund

Owners pay common expenses in the proportions set by the declaration, and the corporation can sue for unpaid assessments. Unpaid amounts can become a lien on the unit, which expires 90 days after default unless it is registered. Ask whether the seller owes anything, and ask your lawyer how this is dealt with at closing.

The corporation must keep a reserve fund, and for buildings of more than 10 units a reserve fund study is required every 10 years, with updates every 3 years. For properties of 10 units or fewer, the reserve fund must equal 100% of the annual operating budget unless the by-laws set a higher percentage.

Red flags and older buildings

• No reserve fund study, or one that is clearly out of date for a building with more than 10 units.
• A reserve fund that is very small compared with the repairs the study predicts.
• Minutes that mention roof, envelope, elevator or parking structure problems with no plan to pay for them.
• Several owners in arrears, or repeated special assessments.
• By-laws or rules that conflict with how you plan to use the unit, such as rules on pets or renting.

Age matters too. Projects under construction before January 1, 2010 with a building permit are grandfathered under the old 1969 Act, and pre-2010 corporations had five years to build a reserve fund. If the building is older, ask how its reserve fund was built up and what the study says about the next ten years.

What to do next

Ask your real estate agent to request the documents as early as possible, and have your lawyer review them before you waive any conditions. Build a condition into your offer that gives you time to review and, if the documents raise problems, to walk away.

• Request the full document package in writing.
• Compare budgets and reserve figures across several years.
• List any questions about fees, repairs or rules.
• Have a lawyer review the documents before conditions are removed.
• Confirm any amounts owing on the unit will be dealt with at closing.

Frequently asked questions