Purchasing in a strata building means buying into its bylaws. Here are some potential deal-breakers
Buying a condo? The legal doctrine of caveat emptor (“let the buyer beware”) continues to apply to real estate transactions in BC today, and can have the effect of denying the buyer a remedy for defects and deficiencies discovered in the property after purchase. In general, the onus is on the buyer to determine the state and quality of the property being sold – rather than on the seller to point out any potential problems.
When purchasing into a strata building, an important part of the buyer’s due diligence process is reviewing and understanding the current bylaws of the strata corporation. A failure to review the bylaws can lead to nasty, unwanted surprises for new homeowners later down the road.
Schedule “A” of the Strata Property Act establishes a standard set of bylaws that apply to all strata corporations unless some or all of them have been replaced by custom bylaws. Any bylaw amendment must be passed by a three-quarter vote of owners at either an Annual General Meeting (AGM) or a Special General Meeting (SGM). Practically speaking, most large strata corporations will have adopted their own custom bylaws.
Bylaws are only enforceable if they are registered with the Land Title and Survey Authority (LTSA). However, there is no strict time limit within which a strata corporation must register the bylaws at the LTSA after their adoption by the owners. In a seller’s condo market, it is not unheard of for prospective purchasers to submit offers without any subjects. In such cases, time-permitting, prospective purchasers should consider ordering a copy of the strata corporation’s registered bylaws from the LTSA prior to submitting an offer.
In addition to reviewing the registered bylaws, it is important for prospective purchasers to request a “Form B” Information Certificate. The Form B discloses a variety of important information about the strata lot and the strata corporation including any copies of any bylaw amendments that have not yet been registered with the LTSA.
Here are five types of bylaws that you should pay particular attention to, as they could make a huge difference to many buyers.
Rental Restrictions or Rental Prohibition
Particularly if you’re purchasing the property as an investment, but also if you might simply want to rent out your place and go travelling, you will want to ensure that you are in fact allowed to rent out your strata lot. The strata corporation may have already enacted bylaws that could either prohibit the rental of residential strata lots entirely, or limit the number or the percentage of strata lots that may be rented out. Strata corporations may also restrict the length of time for which strata lots may be rented.
Short-Term Accommodation Prohibition
Offering up all or part of your strata lot for short-term accommodation can be a significant mortgage helper. However, the rise of AirBnB has led many strata corporations to pass use-of-property bylaws that prohibit short-term accommodations. So, even though the City of Vancouver will now permit primary residences to be let short-term by licensed hosts, that doesn’t mean the strata corporation permits this practice.
These bylaws should not be confused with rental restrictions or prohibitions, as BC courts have found that short-term accommodations are legally different in nature to rentals. Unlike with rental restrictions or prohibitions, there is no grandfathering of use-of-property bylaws. Rather, they take effect as soon as they are registered with the LTSA.
Pet Restriction or Pet Prohibition
When buying a home for yourself, make sure that your pet has a home as well. Pet bylaws vary greatly and can be as extreme as a complete pet prohibition. However, it is more common for strata corporations to restrict the number and types of pets.
The often-used Schedule “A” bylaws restrict pets in a strata lot to one or more of (1) a reasonable number of fish or other small aquarium animals, (2) a reasonable number of small caged mammals, (3) up to two caged birds and (4) one dog OR one cat. Strata corporations who have passed a custom pet bylaw may have modified these restrictions and may require pets to be pre-approved and registered with the strata council.
Approval for Hardwood Flooring
Want to replace carpeting with hardwood floors before moving in? It’s important to remember that when it comes to strata living, an owner is not the master of their own domain. In an attempt to reduce noise transmission between strata lots, many strata corporations have adopted bylaws that specifically regulate the installation of new flooring.
Even if your strata corporation’s bylaws do not contain specific provisions targeting the installation of flooring, the bylaws will always contains some general provisions requiring approval of the strata council for alterations or renovations to a strata lot. Proceed with caution before making such changes.
Unfortunately, many homeowners will check their strata corporation’s bylaws only after a problem arises. One very common issue faced by owners in a strata building concerns the obligation to repair water damage. Depending on the wording of insurance bylaws, you may be liable for damage caused by water escaping from your strata lot irrespective of whether you have been negligent or careless. The easiest way to protect yourself from such claims is by making sure that you purchase your own individual homeowner insurance to fill in any gaps left by the strata corporation’s insurance policy.
The year’s most-read news stories take in the BC election, the mortgage stress test and some diverging market predictions
In a year of market uncertainty, various government interventions and a provincial election, REW’s News + Trends category saw more clicks than ever before. But what were the hottest of all those hot topics? Here’s our countdown of our five most-clicked News + Trends stories of the year…
The fifth most-read news story of 2017 was the announcement of the dreaded “stress test” qualification rules being extended to all new mortgage applicants. The test had already been applied to applicants for insured mortgages (less than 20% down payment) in the fall of 2016, but fears that even those buyers with 20% down payment or more were overstretching themselves – and putting banks at risk – led to the much-anticipated announcement in October 2017. There was a lot of pushback, with some decrying the decision as likely to make things worse.
The only provincial election story to hit our top five most-clicked is this pre-election piece about a key NDP housing promise. The eventually victorious party pledged that if it were to gain power, it would impose a 2% tax on owners of Vancouver homes who do not pay Canadian income taxes (with many exemptions for non-taxpaying locals). As of December 2017, there’s no sign of any such tax so far, but it’s still early days.
The second of two stories on the new stress test, this one anticipates the October confirmation about the new policy, with TD Bank predicting that it could cool the housing market. The reduction in buyers’ purchasing power could be as much as 20%, and with some markets already seeing a slowdown, the new rules could exacerbate any price corrections, said the bank. We’ll see in the first part of 2018 whether TD’s number-crunchers were right…
One of two prediction stories about Vancouver’s housing market in these rankings, this piece was more of a warning than an optimistic outlook. At an industry event, leading real estate marketer Cameron McNeill from MLA Canada warned that the relatively slow rate of new home construction combined with increased demand and population growth meant that Vancouver was “dancing on the edges of a massive problem” in housing supply. What does this mean for market activity and home prices? “We ain’t seen nothin’ yet,” McNeill warned. The article that covered his comments obviously rang our users’ alarm bells, as it was the year’s second most-read News + Trends story.
Our top story of the year was also our first story of the year. This January 3, 2017 article was a round-up of market predictions from various industry groups and Big Banks – some of them bullish, some less so. Most predicted a drop in home sales compared with the frenzy of early 2016 – correctly, as it turns out. But the overall consensus that Vancouver and BC home prices would lose ground turned out to be inaccurate – only Central 1 was correct, in that home prices in fall of 2017 would be higher than a year previously. This story was popular right off the bat in January, but readers also kept coming back to it throughout the year – perhaps to see whose predictions had been right…
Short-term rentals are allowed starting April 2018 – but not before
A short-term rental (STR) is a home, or a room in a home, that is rented for less than 30 days at a time.
Starting April 2018, short-term rentals are allowed, based on new rules that City Council approved at the October 2017 public hearing.
Before April 2018, short-term rentals are not allowed in Vancouver, except in hotels or bed-and-breakfasts (B&Bs) that are zoned and licensed.
Long-term rentals (30 days or more at a time) are allowed in all residential dwelling units (or a room within one) if you have a residential rental property business licence.
Short-term rentals (less than 30 days at a time) aren't allowed, except for hotels or bed-and-breakfasts (B&Bs) that are zoned and licensed.
New rules starting April 2018
Short-term rentals are allowed when:
- It's your principal residence, in other words, where you live most of the year and the residential address you use for bills, identification, taxes, and insurance
- It's a legal dwelling unit (a home with an address that complies with all applicable regulations, including building code and fire safety)
- You have a short-term rental business licence
- If you're renting, your landlord allows you to sublet your home as a short-term rental
- If you're in a strata, your strata bylaws support short-term rentals in your building
Long-term rentals are allowed in all residential dwelling units (or a room within one) if you have a residential rental property business licence.
Short-term rentals aren't allowed when:
- It's not your principal residence, in other words, you don't live there most of the year
- If you're a renter, your landlord doesn't allow you to sublet your home as a short-term rental
- If you live in a strata, your strata bylaws don't support short-term rentals in your building
- It's an illegal dwelling unit (it doesn't comply with all applicable regulations, including building code and fire safety)
Will you have to pay the Empty Homes Tax?
No. To rent your home short-term, it needs to be your principal residence. The tax doesn't apply to principal residences.
Why we’re changing the rules
Vancouver is facing a housing affordability crisis, rental vacancies are low, and short-term rental listings continue to grow. This large, unregulated market creates:
- Health and safety risks to residents and tourists
- Imbalance between hotels, long-term renters, and others with taxes and licencing fees
Allowing short-term rentals only in your primary residence with a business licence will:
- Allow you to earn additional income
- Provide Vancouver with short-term accommodation options to support our tourism industry
- Help us respond to any concerns with noise, garbage, parking, and safety
- Help us protect existing long-term rental housing and potentially add new long-term rental housing to the market
Here is our process and anticipated milestones.
City Council asks staff to create new business licence rules for renting principal residences short-term
Staff investigate existing short-term rental operations in Vancouver and other cities
Jul 11, 2017
Staff present the proposed rules to City Council, who refers them to a public hearing
Nov 14, 2017
City Council holds the public hearing and approves the proposed rules and related bylaw changes
WE ARE HERE
Short-term rentals are allowed in principal residences and you can apply for a business licence