Strata no longer allowing rentals

[jarrettvaughan]

Last year I wrote a letter to my strata to ask permission to rent out my townhouse (personal residence) because I was moving to Europe for 1.5 years for University. Under the strata rules, rentals are not permitted but they gave me permission, due to my situation. I am able to rent this house till Feb 28, 2010. I am now planing to continue to live abroad and would like to continue to rent it out. They have recently sent me a letter stating that my tenant must be out by Feb 28, 2010 or I will receive monthly fines.

I have not asked for an extension as our plans are not finalized yet, but I am very confident that they will turn me down as it seems that the new council looks at this decision as a mistake (even though my tenants are great and cause no issues).

Do I have any legal leg to stand on? Can they legally levy these fines against me? Has anyone fought this in BC?

I do not want to go to court as I would just rather sell the place then to do that. As of right now this property cashflows $400.00 per month and is my cash cow so I do not want to sell it.

Any advice is appreciated.

 

[GarthChapman]

If you post this in the Ask An Expert - Legal sub-forum you should receive some proper legal opinions.

Tough for lay-people to give an opinion on such a question that would be of any real value. My own likely response would be to reply that they have given permission and I acted on that and expect the decision to stand, and that to rescind it would cause me hardship and undue costs... And some more to softly hint I would look to seek redress if they were to rescind the permission. This of course after a call to my lawyer, and assuming he confirmed my belief that I had a strong legal position. I would think you might have some standing under the law, which always over-rides contracts and Board decisions etc. BC Laws tend to support the little guy over the corporation.

Hope that helps,

 

[Thomas Beyer]

QUOTE (jarrettvaughan @ Aug 10 2009, 11:38 AM) ... They have recently sent me a letter stating that my tenant must be out by Feb 28, 2010 or I will receive monthly fines.

I have not asked for an extension as our plans are not finalized yet, but I am very confident that they will turn me down as it seems that the new council looks at this decision as a mistake (even though my tenants are great and cause no issues).

Do I have any legal leg to stand on? Can they legally levy these fines against me? Has anyone fought this in BC?

Any advice is appreciated.

A few choices:

a) get on the condo board and work from within .. i.e. change the strata rules by majority vote

b) pay the fines

c) be aware of the likely fines, don`t pay them and let them accumulate

d) sell the condo

e) get a legal opinion based on precedent that an existing tenant cannot be kicked out and/or a permission for unit where a rental was allowed cannot be revoked .. there may be some precedents

One lawyer that we use for BC transactions (condos + buildings) who may be able to dig out this info (for a small fee) is Tom Docking in Canmore (licensed in BC and AB) at 403-678-5823 or www.canmorelawyer.com or [email protected]

 

[invst4profit]

You could also consider finding a partner to take half ownership that is willing to live in the unit.
A financial arrangement could be worked out.

 

[ChrisDavies]

As far as I know, you`re grandfathered in and they can`t kick out your tenant. I`m not sure about precedent.

 

[jarrettvaughan]

QUOTE (ChrisDavies @ Aug 10 2009, 08:51 PM) As far as I know, you`re grandfathered in and they can`t kick out your tenant. I`m not sure about precedent.

Thank you for the guidance and please keep the ideas coming.

 

[housedoc]

Where do you draw the line between "circumstances" and fraud?
Seems to me that you were cut some temporary slack and now you feel entitled.
Are you not bound by the various contracts (mortgage, occupancy) related to the property?

 

[invst4profit]

For some reason I missed the crucial point in your original post regarding the board giving you temporary permission to rent.
In light of that I would suggest that you not push for something that you clearly understood was against the rules. I would sell the property before Feb 2010 or return to live in it myself..

As investors we should be mindful of the rules and regulations regarding any investment we enter into and not attempt or expect to change the rules after the fact.

Your personal decision to leave the country should not require that the board change there policies that are in place to protect other owners.

Obviously you could not have predicted the path your life would take when you purchased the property but you now need to adjust to the change.

 

[Dan_Eisenhauer]

In BC strata corporations do have the right to enact by-laws restricting rentals. They can say, No Rentals, X number of rentals, or X% of the units can be rentals. I assume from your comments it is NO rentals.

Once a strata unit is rented, the Council has NO authority to tell you when it is to be vacated, as I understand it. Your "hardship" continues. However, the Council did set a date certain in its approval. You may be HOOPED, as Don Campbell is fond of saying.

When a unit is rented in a restricted building, that unit can continue to be rented to the same tenant for as long as that tenant lives there. Once that tenant vacates, you have one year in which to reoccupy the unit, or sell it.

Getting on the Strata Council is probably not a viable option for you at this point. Your distance from BC is not the largest problem. Getting 50% plus 1 of the existing owners to change their minds on this issue is probably a losing battle.

The FICOM (Strata Authority in BC) has written a great guideline that may help you. You can find it here. But, I also think you need some legal advice on this one.

Feel free to contact me if you would like a couple of lawyers` names.

 

[jarrettvaughan]

QUOTE (Dan_Eisenhauer @ Aug 12 2009, 11:43 AM) Once a strata unit is rented, the Council has NO authority to tell you when it is to be vacated, as I understand it. Your "hardship" continues. However, the Council did set a date certain in its approval. You may be HOOPED, as Don Campbell is fond of saying.

When a unit is rented in a restricted building, that unit can continue to be rented to the same tenant for as long as that tenant lives there. Once that tenant vacates, you have one year in which to reoccupy the unit, or sell it. You can rent to a second tenant, although that tenant must be out within the one year.

Thanks Dan,

The first tenant that I rented the Unit to has moved out about 6 months ago and I am now 5 months into my 2nd tenant. As I understand it from your statements, they have to be out one year from their occupancy.

I appreciate your guidance.

 

[MKBridge]

Double check with the Land Title Office that the rental bylaw was registered there. I looked at a building where they said there were X number of rentals allowed, but these bylaws were not regestered. The standard condo bylaws take president and they include allowing rentals. Kathi

 

[RisingWealth]

QUOTE (jarrettvaughan @ Aug 10 2009, 10:38 AM) Last year I wrote a letter to my strata to ask permission to rent out my townhouse (personal residence) because I was moving to Europe for 1.5 years for University. Under the strata rules, rentals are not permitted but they gave me permission, due to my situation. I am able to rent this house till Feb 28, 2010. I am now planing to continue to live abroad and would like to continue to rent it out. They have recently sent me a letter stating that my tenant must be out by Feb 28, 2010 or I will receive monthly fines.

I have not asked for an extension as our plans are not finalized yet, but I am very confident that they will turn me down as it seems that the new council looks at this decision as a mistake (even though my tenants are great and cause no issues).

Do I have any legal leg to stand on? Can they legally levy these fines against me? Has anyone fought this in BC?

I do not want to go to court as I would just rather sell the place then to do that. As of right now this property cashflows $400.00 per month and is my cash cow so I do not want to sell it.

Any advice is appreciated.


Hi Jarrrett,

Judging by your post, you have been given a break and you wish to change the terms of the deal, by asking for an extension.
I was on a strata a number of years ago, and we joined an association called CHOA which is a wealth of information which may help answer some questions for you. http://www.choa.bc.ca/strata.html.
My recollection of the legal standing in this situation is that when a strata council grants permission to rent out a unit where it is otherwise against the by-laws, there are only about three life altering reasons to which you would have legal standing to force the allowance.
I believe that there has been a change to allow any original owners unquestioned ability to rent and once that unit is sold that right is lost for that unit. For this reason the no rental by-law is usually registered to allow at least a small percentage but under rather strict conditions.
Also be aware that the council can assess fines against your unit due to the actions of your tenant and you have no legal right to force the tenant to pay, so make sure you have a good tenant and that they are supplied with an updated copy of the bylaws with the understanding that they follow the rules.
All that being said, you must wonder if it is worth all the posturing just to invoke your will over people who clearly don`t want rentals. If however, you find support from other owners for such a change, then I agree with Thomas and you could gain support to get on the council and make the changes which would reflect the voting majority, and keep your cash cow.

Hope that helps and do check out CHOA

Mark

 

[Dan_Eisenhauer]

Quick answers:
Kathi`s suggestion is a good one.

The right to rent a unit, unless it is within the number of rental units permitted in a building, expires within one year of the original tenant`s (at the time of the by-law change) moving out. If the unit is one of the orignally allowed rental units, which this one is not, there is no time limit, IF it is within the number or % allowed.

IE: If the limit is 10 rental units, and 11 have been rented. If your is the first to change tenants after the imposition of the restriction, you may rent it for one more year to a second tenant, with the expirey of that permission to occur on the anniversary of the First tenant`s moving out. The problem becomes finding a tenant who is willing to sign a one year lease, or even less if it takes time to find that tenant.

Any owner has two options at that point:
1: Have a family member occupy the unit
2: Sell

Obviously, most investors sell.

Rental restrictions in BC is one of the major drawbacks of condo investing in BC. You may end up with no control over when you have to sell your unit.

 

[jarrettvaughan]

There is clearly a lot of expertise here and thank you for your help.

I believe that my options are to sell or to evaluate the fines against my cashflow and make a decision based on that.