Three Siblings, One Condo, and a Lawsuit No One Mentioned

The situation

Sandro, Karim and Samir had been talking about buying property together for two years. None of them could afford a home on their own income, but combined, the three siblings could qualify for a mortgage and cover a down payment on a two-bedroom condo unit. The plan was straightforward: Sandro would live in it, and all three would share the mortgage and eventually the equity.

They found a unit in Oshawa listed at roughly $480,000, in a mid-rise building that was about fifteen years old. It was their fourth offer that spring. The first three had been lost to buyers who came in with fewer conditions attached to their offers, meaning fewer ways for the buyer to change their mind or walk away before closing. On the advice of their real estate agent, the siblings decided that on this fourth try, they would drop the condition that let their lawyer review the condominium corporation's status certificate before the deal became binding. Every other serious buyer looking at that unit was doing the same thing, they were told, and the seller's agent had made clear that offers with fewer conditions would be looked at first.

The offer was accepted the same evening, without any review condition attached. Sandro called Treadstone Law two days later, once the agreement of purchase and sale was already firm and binding on both sides, to arrange the closing.

What the review found

A status certificate is a package of documents that a condominium corporation is required to produce under the Condominium Act, 1998. It sets out the corporation's finances, the state of its reserve fund (money set aside for major repairs like roofs, elevators and building envelope work), any special assessments being considered, the corporation's rules, and whether the corporation is a party to any court proceedings. When a resale agreement includes a status certificate review condition, the buyer's lawyer reads this package during a short window after the offer is accepted and can advise the buyer to walk away, deposit and all, if something concerning turns up.

Sandro, Karim and Samir's offer had no such condition. That meant Treadstone Law's review, once retained, was for information and planning purposes only — the firm could no longer advise the siblings to terminate the deal without breaching the agreement and risking their deposit, which was roughly $24,000.

The certificate still had to be requested and read, because closing a condo purchase properly requires it regardless of whether a condition is attached. What it showed was concerning. The corporation was a defendant in a lawsuit brought by a contractor over unpaid invoices tied to a building envelope repair project completed two years earlier — work related to water infiltration around several units' windows and balconies. The corporation disputed the amount owing and was defending the claim, but the certificate disclosed that if the corporation lost, or settled for a significant amount, the reserve fund might not cover it. That kind of shortfall is usually recovered through a special assessment: a one-time additional charge levied against every unit owner, proportional to their share of the common expenses, on top of their regular monthly condo fees.

The certificate did not say how much the claim was worth, and the corporation's board had not yet decided how any shortfall would be funded if the case went badly. That uncertainty was the real problem. The siblings were about to become owners in a building carrying an open-ended, unquantified financial exposure, with no contractual way to back out of the purchase.

What we did

1. Confirmed there was no way out of the agreement. Because the status certificate condition had been waived before the offer was signed, the agreement was firm and binding. Backing out at this point would have exposed the siblings to losing their deposit and potentially being sued by the seller for damages if the property later resold for less. Walking away was not a realistic option, and we told the siblings that plainly rather than let them hope otherwise.
2. Requested the underlying litigation documents. The status certificate itself gave only a summary. We asked the condominium corporation's property manager for the statement of claim and the corporation's defence, which gave a clearer picture of the dispute's size and the contractor's allegations, and confirmed there was no judgment against the corporation yet — the matter was still being contested.
3. Went back to the seller before closing to renegotiate. Sellers are required to disclose material changes to a condo's status between the agreement date and closing, but a pre-existing lawsuit the seller had simply not mentioned sat in a grey area, since no condition had required disclosure or a walk-away right. We raised it directly with the seller's lawyer, framing it as a real financial risk the siblings were inheriting that had not been reflected in the negotiated price, and asked for a price adjustment rather than threatening to breach the deal, since we had no real leverage to threaten anything.
4. Negotiated a closing credit and an escrow holdback. The seller agreed to reduce the purchase price by roughly $10,000 and to have a further $8,000 held in escrow by the seller's lawyer for a period after closing, releasable to the siblings if the lawsuit resolved against the corporation within that window, and back to the seller if it did not. This did not eliminate the risk, but it meant the siblings were not paying full price for a unit carrying undisclosed litigation exposure, and had a partial cushion if a special assessment followed quickly.
5. Advised on the ongoing exposure after closing. We explained to the siblings that condo ownership always carries some risk of special assessments, litigation risk included, and that reading status certificates and board meeting minutes going forward — something available to any owner — was the best way to stay ahead of decisions the board might make about funding a shortfall.

The outcome

The purchase closed at roughly $470,000 instead of the original $480,000, with the $8,000 escrow holdback sitting with the seller's lawyer for several months after closing. The lawsuit against the corporation was still ongoing at that point, and the board had not yet resolved how it would fund a settlement or judgment if the contractor succeeded, so the holdback ultimately reverted to the seller once the review period in the escrow agreement expired without a resolution to point to.

The siblings absorbed a real cost: they now own a unit in a building with an open legal claim against it, something they would have known and could have priced into their offer, or avoided altogether, had the review condition been in place before they signed. The $10,000 price reduction and the chance at the $8,000 holdback were real value recovered, but they did not make the underlying risk disappear — it simply moved with the property, as it does for every owner in that building.

Two years later, the litigation was still unresolved, and no special assessment had been levied. That may still happen, or the corporation may prevail in its defence, or the case may settle for an amount the reserve fund can absorb without any assessment at all. The siblings understand the range of outcomes now, and they read every notice the board sends rather than filing it away.

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