Manitoba

The Condominium Act & Information

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Buying or Selling a Condominium Unit

 

NOTE: All references to Section numbers refer to sections in The Condominium Act (SM 2011, c. 30, Sch. A).

RE: Part 4 of The Condominium Act

Part 4 of the act governs the sale of units.

It sets out the information the seller must give to the buyer. It also allows the buyer to cancel the agreement of purchase and sale during the cooling-off period, or because of a material change.

Part 4 also sets out the requirements for:

  • the registration of a transfer of land for a unit
  • the seller’s rights and obligations during an interim (temporary/short-term) occupancy of a proposed unit

Part 4 does not apply to certain transactions, such as a tax sale, listed in section 46 of the act.

Sections 45, 46

What information must the seller give the buyer?
The information the seller must give the buyer depends on whether the declaration and plan have been registered yet.

  1. On the sale of a proposed unit before the declaration and plan are registered, the seller must give the buyer an information package that contains:
  • a table of contents (attached to the front of the information package), stating:
    • whether any required documents are missing
    • when the buyer can expect these documents or why the seller cannot provide them
    (Form 6A, Condominium Regulation)
  • information about the cooling-off period and the right to cancel [This must be the first document in the package.]
    (Form 4, Condominium Regulation)
  • information about the right to cancel because of material changes (significant changes) [This must be the second document in the package.]
    (Form 5, Condominium Regulation)
  • disclosure statement from the declarant that gives information about the corporation and the property
    (Form 1, Condominium Regulation)
  • The buyer must also receive copies of:
    • a copy or summary of the reserve fund study or update, if a study has been done
    • a statement of financial projections (outlined below under the question: “Do declarants need to prepare a statement of financial projection?”)
    • the proposed declaration
    • the proposed first by-law and any proposed rules
    • any proposed property management agreement
  • The Condominium Regulation also states that the buyer must receive copies of the parts of the proposed plan that show:
    • the shape and boundaries of the unit
    • the location of the unit compared to the other units and the building, as well as what level it’s on (if relevant – if there is more than one level)
    • the common elements that are for the unit’s exclusive use

      Sections 51(1) and (4)
      Condominium Regulation Sections 6, 8, 9, 10, 11(1)
  1. On the sale of an existing unit after the declaration and plan are registered, the seller must give the buyer an information package that contains:
  • a table of contents (attached to the front of the information package), stating:
    • whether any required documents are missing
    • when the buyer can expect these documents or why the seller cannot provide them
    (Form 6B, Condominium Regulation)
  • information about the cooling-off period and the right to cancel
    (Form 4, Condominium Regulation)
  • information about the right to cancel because of material changes (significant changes)
    (Form 5, Condominium Regulation)
  • a current (up-to-date) disclosure statement from the seller giving the buyer information about the corporation
    (Form 2A, 2B, or 2C, Condominium Regulation)
  • a disclosure statement from the condominium corporation, signed within 90 days before it is given to the buyer
    (Form 3, Condominium Regulation)
  • The buyer must also receive a copy of:
    • the declaration and all registered amendments and proposed amendments that the board has approved
    • the condominium corporation’s budget for the current fiscal (financial) period and the next fiscal period (if the budget has been given to the unit owners)
    • the condominium corporation’s latest financial statements and the auditor’s report (if one was done)
    • the current by-laws and rules, and any proposed by-laws or rules or amendments that have been approved by the board but are not yet in effect
    • any property management agreement
    • any notice the seller has gotten for a general meeting of unit owners that will be held after the buyer’s possession date
    • any reserve fund study, or update, that has been done; or a summary of the study or update
  • In some cases, the buyer must also receive:
    • the 12-month statement of financial projections, if the purchase is within that 12- month period
    • a copy of the meeting notice given to the seller, if the corporation proposes to amalgamate (join) with another condominium corporation
    • a copy of any notice the seller has received that the corporation is withdrawing (removing) the property from governance under The Condominium Act
    • a statement about consents that the seller has given to the board, if the period for getting consents has not ended. This tells the buyer whether he/she will have a say in a matter the condominium corporation is thinking about, but has not yet decided.

      Sections 51(2) and (4)
      Condominium Regulation Sections 7, 8, 9, 10, 11(2)
  • Note: If a unit has more than one buyer, the buyers must choose one of them to be the person who will receive the disclosure documents, who can cancel the agreement during the cooling-off period or because of a material change, and who can make a statutory declaration for the registration of the transfer of land.
  • Section 48

Which disclosure forms should sellers use?
The regulation contains four different forms for disclosure to be used depending on the situation:

  • Form 1 - Disclosure Statement (Sale of Proposed Unit Before Declaration and Plan are Registered)
  • Form 2A - Disclosure Statement by Seller When Seller is Declarant or Subsequent Owner of All the Units (Sale of Unit after Declaration and Plan are Registered)
  • Form 2B - Disclosure Statement by Seller When Seller is Not Declarant (Sale of Unit after Declaration and Plan are Registered)
  • Form 2C - Disclosure Statement by Seller when Seller is Owner-Developer (Sale of Proposed Unit in a in a Phased Development Before Registration of Amendment to Declaration and Plan)

What happens when a buyer (the first buyer) decides to sell his/her interest in the unit to another buyer (the next buyer) before the unit is transferred to the first buyer, under an agreement of purchase and sale?
The first buyer must:

  • give each disclosure document received to the next buyer
  • inform the seller of the unit, in writing, about the sale to the next buyer, and
  • give the next buyer's contact information to the seller of the unit

The next buyer then becomes the buyer of the unit, and the seller must give that buyer any disclosure documents that weren’t given to the first buyer.

      Section 51(3)

Do declarants need to prepare a statement of financial projections?
If a declarant wants to sell a unit, or proposed unit, in the first year that all unit owners are contributing to the common expenses, the answer is yes.

This statement of financial projection gives buyers estimates of contributions they will need to make to the common expenses and the reserve fund during the first year after unit owners begin paying common expenses. If the declarant’s financial projections prove to be wrong, the declarant will have to pay the amount of any budget deficit to the condominium corporation, based on a formula in section 65 of the act. The purpose is to ensure that buyers of units in new developments receive reasonable estimates of what they will have to pay in common expenses and reserve fund contributions.  

This statement must cover the 12-month period (beginning with the first month all unit owners contribute to the common expenses) and set out:

  • the projected contributions of each unit owner to the common expenses, and to the reserve fund (for every type of unit)
  • the projected total common expenses of the condominium corporation
  • for each type of common expense (ex: snow-clearing, property management, cleaning):
    • a description of the service/amenity
      and
    • the projected total expenses/costs
  • the projected revenue/income of the condominium corporation
  • the projected opening and closing balances of the reserve fund
  • the estimated cost of the reserve fund study to be made during that period

      Section 49

Who prepares the disclosure documents that a seller must give to the buyer of a unit?
The documents that a seller has to give the buyer of a unit or proposed unit include a disclosure statement that is prepared and signed by the seller under section 51(1)(a) or 51(2)(a) of the act. The Condominium Regulation provides forms for disclosure statements.

A declarant selling a proposed unit will have access to the other documents that must be given under Section 51(1) or will be able to prepare them. After the declaration and plan are registered, the seller of a unit or a person authorized by the seller (such as a real estate agent) can ask the condominium corporation, in writing, for copies of the other disclosure documents that must be given under Section 51(2), such as:

  • a disclosure statement by the condominium corporation, which the seller must give the buyer (under Section 51(2)(b) of the act)
    and
  • any documents the condominium corporation has, that the seller must give the  buyer (under sections 51 and 52 of the act).

The seller or the buyer may also ask the condominium corporation (in writing) to confirm that the information in the documents it gave to the seller are current (up-to-date). If the information is not current, the corporation must give details of any material change in that information.

The condominium corporation may charge reasonable fees for providing these documents and information.

        Section 53

What is the cooling-off period?
This is the period of time that buyers of condominium units have to read the disclosure documents given to them from the sellers.

Buyers can use this time to decide whether they are sure they want to go ahead with the purchase of the unit. The buyer can cancel the agreement to purchase for any reason during the cooling-off period.

The cooling-off period is seven days and begins on the later of:

  • the day when the agreement is entered into
    and
  • the day when the seller gives the buyer the required disclosure documents.

For example: The buyer and seller enter into a purchase agreement on May 1.

  • If the seller gives the buyer all of the required disclosure documents (or all the documents that can be given, with an explanation as to why the rest cannot be given), on May 1, the cooling-off period ends on May 8 at midnight.
  • If the seller does not give the buyer all of the required documents until May 10, the cooling-off period ends on May 17 at midnight.

The cooling-off period may end on a Saturday, Sunday or holiday, unless the holiday is Remembrance Day.

      Section 47(1), 54(1) and (4)

What is a Material Change?
A material change occurs when:

  • one or more items in the disclosure documents have changed, and if the changes had happened before the documents were given to the buyer, they would have been required to be included in those documents
    and
  • the changes, looked at together, are so important to a decision to purchase the unit that it would be reasonable for a buyer to cancel the agreement because of them.

A seller who finds out about a material change must, as soon as possible, give the buyer:

  • a written notice that describes the change and includes a required statement about the buyer’s right to cancel the agreement to purchase because of the change
    and
  • any other disclosure documents the seller would have had to give the buyer, if the material change had happened before the seller gave the original documents to the buyer (Form 7, Condominium Regulation).

The buyer has the right to cancel the agreement to purchase by midnight of the seventh day after the seller gives notice of the material change (A buyer cannot, however, cancel the agreement after receiving possession of the unit).

A buyer who finds out about a material change, but has not received notice of it from the seller, may cancel the agreement at any time before getting possession of the unit, or, if the seller later gives notice of the change, by midnight of the seventh day after the notice is given.

The seventh day may be a Saturday, Sunday, or a holiday, unless the holiday is Remembrance Day.

NOTE: If a seller does not tell the buyer about a material change, the buyer may ask the court to order the seller to pay the buyer damages.

      Sections 47(2), 52, 54 (2) to (4)
      Condominium Regulation Section 12 and Form 5

How does a buyer cancel an agreement to purchase during the cooling-off period or because of a material change?
To cancel an agreement of purchase and sale, the buyer must:

  • give a written notice of the cancellation to the seller
    or
  • send a written notice of the cancellation by registered mail, fax or e-mail — or any other method that shows proof of the date and time it was sent — to the address, fax or email the seller (or the seller's agent) has given the buyer for this reason

If a buyer is cancelling because of a material change that the seller did not disclose, the written notice must:

  • state that the buyer is cancelling the agreement because of a material change
    and
  • identify the change and explain why it is a material change.

      Section 54(5) to (8)

Is a buyer entitled to a refund after cancelling?
Yes. If the buyer cancels the agreement to purchase during the cooling-off period, or because of a material change, the seller (or agent) must refund whatever amount the buyer has already paid under the agreement. This amount, plus interest, must be paid to the buyer within 10 days after the seller receives the notice of cancellation.

      Section 56(1), and (2)(a)

Can the seller challenge a cancellation because of a material change?
Yes. If a buyer cancels an agreement to purchase after the cooling-off period has ended because of a material change that was not revealed by the seller, the seller may, within 10 days after receiving the notice of cancellation, apply to the court for:

  • a determination (decision) that the buyer didn’t have a right to cancel the agreement
    and
  • other remedies, including:
    • an order that frees the seller from the obligation (under section 56) to refund money paid under the agreement of purchase and sale, or to pay interest on that money
    • an order that the buyer must pay damages suffered by the seller because of the cancellation

Depending on the outcome, the seller must refund any money owing within 10 days after the court makes an order.

      Sections 55 and 56(2)(b)

Does a reserve fund study need to be done before the sale of a unit?
The act and regulations include general requirement about when reserve fund studies must be done and updated. In addition, even if not otherwise required, a reserve fund study must be done before the sale of a converted unit or the delayed sale of a unit.

 A converted unit is a unit that was occupied before the building was registered as a condominium. A delayed sale refers to a development that was registered as a condominium (usually when it was built), but in which the units have all been rented or leased instead of being sold to individual owners.  

For more information on the sale of a unit in the above situations, see Section 50. For more information on reserve funds and reserve fund studies, click here.

What is a status certificate?
A buyer or unit owner can ask the condominium corporation for a status certificate that states:

  • whether the unit owner owes any money to the corporation
    and
  • whether the unit owner is in violation of the condominium corporation’s declaration, by-laws or rules – for which the buyer could be held responsible.

A condominium corporation is bound by the information that is provided in a status certificate.

      Section 61
      Condominium Regulation, Form 8,

Need more information?
For more information, or details about the sale of units and proposed units, see:

  • Part 4 of The Condominium Act,
  • Part 3 of the Condominium Regulation.

 

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