What is an estoppel?

In Alberta an Estoppel Certificate is a document created by a Condominium Corporation which sets out certain information, such as amounts owing on a unit.  This post discusses estoppels and more broadly discusses what a Corporation has to disclose to an entitled party (which is an owner, purchaser, or mortgagee).

A potential buyer or mortgagee of a unit will want an estoppel, so that they can know with certainty what liabilities come with acquiring a unit.  Information in an estoppel is guaranteed to be true.  The Condominium Corporation is prevented (“estopped”) from later changing the declarations in the estoppel, even if an honest error was made.  This has enormous implications.  Suppose a unit was behind tens of thousands of dollars in condo fees but is given a “clean” estoppel (it showed nothing owing), the Corporation would be out of all of that money, and have no way of collecting, even if it was an honest mistake (suppose the person who issued it wasn’t familiar with the history of the unit).  Keep in mind that condo fees, special assessments, and arrears all are attached to the unit, not a specific owner.  They move from seller to buyer.  If a buyer acquires a unit with arrears, the buyer assumes that obligation.  So, a smart buyer will always want to ensure a unit is free of any arrears (or if there are any, they’ll insist they be settled in the closing process).

What information is in an estoppel?  In Alberta, that varies.  This is partly due do the fact that the word “estoppel” is not defined in the Condominium Property Act.  Section 39(6) lists certain items that must be provided on request to an entitled party.  The Condominium Corporation must disclose the amount of condo fees and how often they are paid (usually they are paid monthly), what if any arrears (or over-payment) exist on those fees, and the interest owing on such arrears.  That’s it.  In its narrowest definition, that’s all that goes on an estoppel, as that is all the Corporation is “estopped” from revising information on.  As the Act says “the certificate is conclusive proof of the matters certified in it”.

Now, if you look at the typical Estoppel Certificate in Alberta, you will see more than this.  That’s because of Section 44 in the Act, which has other items that must be disclosed on request of a qualified party.

Some of this extra stuff might appear on an estoppel or it might appear on “Information Letter”, sometimes called a “Manager’s Letter”.  Sometimes an estoppel will reference other documents that are included or available separately.  Regardless of what anything is called, or how it is given, if the information is requested by a qualified party (owner, buyer, or mortgagee), it must be provided within 10 days.  While, the Corporation is not “estopped” from making changes Section 44 information, there’s still a legal duty to get the facts right the first time.

Section 44 of the Alberta Condo Act requires the following:

  • What are the condo fees, special assessments and any arrears, including interest.
  • Details of any legal action filed on the Corporation, unsatisfied judgement, or written demand that’s greater than $5,000 that could result in a legal action.
  • A copy of any management agreement
  • A copy of any recreational agreement
  • Details of any post-tensioned cables in use.  Most buildings don’t have these.  If yours does, it should have a current engineers report on their status, and that report should be released to satisfy the requirement.
  • The current  budget and most recent financial statements of the Corporation.
  • Bylaws of the Corporation
  • Minutes of the last Annual General Meeting
  • Amount of the Reserve Fund
  • Indicate what the unit allocation factor is for unit and how it was determined.  Every Condominium Plan should indicate what each unit’s factor is out of a total of 10,000 factors.  They might be allocated based on suite size or an equal basis.  You need to check the plan to see which is used.  While a buyer should always want to know what the unit factor is, why it is what it is may not be that important, and is typically not asked for (but it could be).
  • Any structural deficiencies in the building.  This is a tough one because of the definition of what a deficiency is.  All buildings have problems, but what has to be disclosed is up for debate.  If you’re uncertain about something, you may wish to talk to a lawyer.  Properly disclosing this, like other information, will help protect the Corporation from a lawsuit later on.
  • A copy of any lease agreement or exclusive use agreement with respect to the possession of a portion of the common property, including a parking stall or storage unit.
  • Section 48 of the Act requires an Insurance Certificate be provided on request.

Importantly, even though it is not made perfectly clear in the Act, an Estoppel (or Information Letter) should always indicate any known special assessment that is upcoming.  A Corporation wants any potential buyer to know what money is owed on the unit, or will be owed on the unit, to ensure it gets its money without dispute.