What is an Estoppel Certificate?
An estoppel certificate is a legally binding document that provides financial information about a condominium unit. It is issued by the condominium corporation to a unit owner, purchaser, mortgagee, or their authorized representative upon written request. The CPA states that the corporation must issue the certificate within 10 days of receiving the request.
What Information Must an Estoppel Certificate Include?
Per the CPA, the estoppel certificate must certify the following:
The amount of any condominium contributions payable by the unit owner.
The frequency of contributions (e.g., monthly, quarterly, annually).
The total amount of contributions in arrears, if any.
The amount of interest owing on any unpaid contributions.
Legal Importance: The estoppel certificate serves as conclusive proof of the financial status of the unit as of the date of issuance. This means buyers, mortgagees, and lawyers can rely on the certificate's accuracy when making financial and legal decisions.
The Role of Condominium Corporations in Estoppel Certificates
Condominium corporations are responsible for:
Issuing the certificate within 10 days of receiving a written request.
Ensuring that all financial information is accurate and up to date.
Providing the certificate to the unit owner, buyer, mortgagee, or their representative upon request.
Retaining copies of issued certificates for record-keeping and compliance purposes for three years.
Important Consideration: If an estoppel certificate is issued with errors or missing information, it could lead to legal disputes or financial liabilities for the condominium corporation.
Issuance and Record Keeping Obligations
Condominium corporations must follow strict procedures when issuing estoppel certificates:
Timeline: Must be provided within 10 days of a written request.
Requesting Parties: The unit owner, potential buyer, mortgagee, or their legal representative may request the certificate.
Recordkeeping: Corporations should retain copies of issued estoppel certificates for legal and auditing purposes.
Fees for Estoppel Certificates and Related Documents
Condominium corporations are allowed to charge fees for preparing estoppel certificates and related documents. The Condominium Property Regulation specifies the maximum fees that a condominium corporation may charge for an estoppel certificate and a rush fee as follows:
$200.00 – Maximum fee for issuing an estoppel certificate.
$100.00 – Additional rush fee if the estoppel certificate is required within 3 days or less.
However:
Fees must be reasonable and disclosed in advance.
Some bylaws set maximum fees that a corporation may charge.
Fees should reflect administrative costs but must not be excessive.
Common Mistakes & Risks in Issuing Estoppel Certificates
Omitting outstanding fees, leading to financial loss for the corporation.
Failing to issue the certificate within 10 days, potentially delaying sales.
Charging excessive fees, which could be challenged by the buyer or owner.
To mitigate these risks, condominium managers should double-check all financial records before issuing an estoppel certificate and ensure compliance with CPA timelines.
Best Practices for Accuracy
Double-check arrears and interest amounts before issuing the certificate.
Keep financial records up to date to avoid discrepancies.
Ensure the certificate is signed and dated to confirm its validity.
Retain a copy of the estoppel certificate in the condominium corporation's file for three years.
Creating an Estoppel Certificate Compliance Checklist
To ensure compliance, condominium managers should use the following checklist when issuing an estoppel certificate:
Confirm request eligibility – Ensure the request is from a unit owner, buyer, mortgagee, or their authorized representative.
Verify financial contributions – Confirm the amount, frequency, arrears, and interest owed.
Issue the certificate within 10 days – Track request dates to meet the legal deadline.
Check for accuracy – Review financial statements before certifying the information.
Retain a copy for records – Maintain documentation in case of future disputes.
