Buying and Selling a Condominium Unit
Condominiums, in general, represent a way of ownership for a multi-unit building where each unit is individually owned, while the common elements (i.e. hallways, elevators, etc.) are owned by all unit owners. In order to legally create a condominium and manage its operations, there are certain key documents required which form the condominium's constitution. These documents are briefly described below:
Declaration and Description
Both the Declaration and Description are required to be registered on title to the property before a condominium can be recognized. The Declaration is the basic document creating the condominium corporation. It contains a written description of the units, how ownership of the common elements is to be allocated and it may also state any restrictions to the use of the unit or the common elements. Also, there may be special provisions relating to recreational facilities. The Description, on the other hand, is prepared by a surveyor and is a pictorial representation of the boundaries of the units and common areas.
By-laws of a condominium are similar to those of any corporation. They regulate the management and operation of the condominium. Matters included in the by-laws include the number of directors and notice periods for the meetings of directors and unit owners. In order for the By-laws to be effective, they must be registered on title.
Rules and Regulations
Directors of the condominium may pass rules for the condominium respecting the use of the common elements and units. The rules must be intended to promote the safety, security and welfare of the owners, and the property and assets of the condominium. To be effective, these rules need to be reasonable and notice provided to each unit owner. Unlike the condominium By-laws, rules and regulations do not need to be registered on title.
There are numerous rules relating to the purchase of new condominium units. For example, a purchase agreement for a new condominium is not legally binding unless a current disclosure statement is delivered to the purchaser. This statement includes a description of the property and its proposed amenities, a copy of the declaration, by-laws, rules and insurance trust agreement, and other items required by law. Purchasers must also receive a copy of the budget covering the year immediately following registration of the declaration and description. The budget statement must also particularize the common expenses of the condominium, particulars of the type, frequency and level of the services to be provided, portion of the common expenses to be paid into a reserve fund, etc.
To ensure that you are provided with all the requisite information to enable you to make an educated decision on whether to purchase or rescind an agreement to purchase a new condominium unit, consult with one of our experienced real estate lawyers.