Condominiums:
I have been asked a number of questions by Realtors about condominium purchases lately. Usually the answers require a realtor to reconsider some of the basics of Alberta Condominium Law.
I will review some of the basics you should always keep in mind when dealing with a condominium.
Remember:
1. A condominium is an alternative legal system of real estate ownership. It is not a particular type of construction. Therefore, condos can range from a small apartment to a $1 million plus home like the ones you can find in Springbank.
2. Your client is purchasing or selling or mortgaging an interest in real property AND a share of a corporation, which is the condominium corporation.
3. There are 10,000 shares in every condominium corporation. When your client buys or sells a unit they are buying or selling the shares associated with that unit. Then as a shareholder they elect a board of directors of the condominium corporation. The condominium corporation then typically hires a management company or they may choose to self-manage.
Regardless of whether the corporation hires a management company or is self managed, the condominium corporation documentation must be maintained and kept up to date as with any corporation. (I had a deal fall apart last month because the self-managed corporation did not have a properly elected board of directors to issue an Estoppel Certificate, and the mortgage company refused to finance the purchase without the Estoppel Certificate.)
4. The real estate transaction involves individual ownership and financing of specifically defined spaces called “Units”, as well the “Share”, called a “Unit Factor” of the balance of the project which is all the common property.
The Unit and Plan Number that are on title are critical. Those must be in the purchase contract. The number on the door of the unit often is not the same as the legal Unit number.
If you obtain a copy of the condominium plan from the condominium management company or from the Land Titles Office, you can relate the number on the door to the legal Unit number. In our firm, we always pull the plan and make sure it relates to the property Unit number shown on the Purchase Contract. Sometimes we discover that the wrong legal Unit was transferred in the past, because people were focusing on the municipal address and failed to check the correct Unit numbers against the Plan.
5. As a realtor, you must determine whether there is titled parking or a titled storage unit that is to be sold with the primary Unit. If there is, then the Unit number for the parking stall and or the storage compartment must be included on the purchase contract. We double check that at our firm on every condominium transaction and it is surprising how often we find that they were missed in the past.
– Bill Fric