When placing an offer on a resale condo, you get a chance to review the rules and regulations that govern the condo development.
There’s five you should look out for:
- Rental limitation.
- Short-term rental bans.
- Pet restrictions.
- Flooring types.
- Insurance requirements.
If you’ve read our Introduction to the world of condos article, you’re aware that even though you can be a condo owner, the condo corporation has some power over how you use your condo or what you can do to it. This power comes from rules and regulations that are available to any current owner or prospective buyer.
When placing an offer on a condo, it’s always a good practice to put in your conditions a review of the condo documents. This includes reviewing the condo development’s finances, declaration and rules, and bylaws. These bylaws have a big impact on your life or how you use your condo.
Everyone’s aware that before signing a contract you need to read and understand it first. So why do condo buyer forego the important step of fully reading the condo or strata bylaws?
In this article, we’ll go over the five types of bylaws that you should pay attention to.
Rental Restrictions or Prohibition
Some people buy a resale condo with the long-term goal of renting it out. Others who live out of the country for several months may wish to rent the unit to offset the costs.
If this applies to you, check the rules governing rental restrictions. There are sometimes condo developments that restrict the number or percentage of units that can be rented out.
In extreme cases, there are developments that prohibit any kind of long term rentals.
If you’re buying a resale condo that has such restrictions in place already, you have no legal recourse to contest them. Even if the unit you are buying has a grandfather clause (meaning the rule was passed after the unit was bought and rented out), the grandfather clause will expire as soon as you take possession.
Short-Term Rental Prohibitions
Thinking of offsetting your upcoming mortgage payments by renting out a room or your couch on AirBnB?
An increasing number of developments have outright banned short-term rentals.
The rule or bylaw generally doesn’t use terms like ‘short-term’ or ‘AirBnB’. Rather, the rule will put a minimum length of time a unit must be rented for. By placing a minimum of 90 or 120 days, this limits short-term renters.
Risk-taking prospective buyers may think it’s worth trying to rent out their unit in secret. After all, the income from renting only one bedroom in a tourist city like Montreal or Ottawa could almost cover the entire mortgage payments. Playing cat and mouse with your condo board is never recommended. Here’s how an illegal Airbnb usually gets discovered:
- Your neighbors will likely notice different people coming in and out of the condo. In the worse case, your AirBnB guests will make too much noise or cause a disturbance OR
- Someone on the condo board checks short-term listings regularly and finds your unit
- You will be reported to the condo board
- The condo board will collect proof you are illegally renting your unit
- The condo board will fine you according to the rules and regulations
Fines for dissuading short-term rentals are set as a deterrent and generally very aggressive. Most development will set it to $1,000 for a first infraction. Then second infractions are $1,000 followed by $1,000/day for each day the unit is rented out. This is specifically set up so that any infraction of the bylaw evaporates any earnings the short-term rental can generate.
Even if the development you’re looking into buying allows short-term rentals, make sure to check for the city or municipal bylaws on the topic. Cities like Vancouver and Toronto are considering curtailing services like Airbnb through taxes and regulations.
Finally, check how your province legislates short-term rentals. For example, BC courts have ruled that short-term accommodations are legally different in nature to rentals. This could have a big impact on things like the type of insurance you need or accommodations for handicapped persons.
Pet Restrictions or Prohibition
If you’re already a pet owner or plan on having one soon, you need to make sure you can bring your animal home.
Pet bylaws are becoming increasingly common in condo developments and vary quite a bit. Some condos limit the amount an owner can keep in unit, others limit the weight of each animal and some ban them altogether.
Specifically in BC, stratas tend to have some pet restriction because most follow a government-issued template. The bylaw will typically restrict to one or more of a reasonable number of fish or other small aquarium animals, a reasonable number of small caged mammals (ie hamster), up to two caged birds and one dog OR one cat.
When reviewing the bylaws and regulations, it’s important to check for pet restrictions in three documents.
The first place to look for is in the declaration. This is where most restrictions can be found. Depending on the province you’re in, they may be under a specific header or hidden in the weeds.
The second place to look for is in any rule or bylaw that was voted in after the declaration.
The third documents to look into are last year’s assembly meeting minutes. It may be that a resident brought up the issue for next year’s vote. If you’re closing date on the condo happens after a successful pet ban, you may be in for some legal challenges.
If you want to learn more about pets in condos and the legal framework surrounding the issue, you can consult our article on pets in condos.
Limitations on Flooring Types
This is especially true for those buying older resale condos. They sometimes come with retro carpeting. If you’ve read our guide to which condo upgrades add value, you’d likely be tempted to replace them with hardwood.
Great idea except for one thing: some condo developments limit what types of flooring types can be installed.
The reason condos and stratas have these rules is to limit the propagation of noise from one floor to another. Hard surfaces like hardwood, ceramic and laminate flooring don’t dampen the noise from footsteps, pets or falling objects.
You’ll find these types of limitations in wood construction buildings (ie terrace homes or low-rise condo developments). However, they’re becoming more and more common in concrete constructions.
You’ll need to check both the declaration and condo rules and bylaws to find out if there are any limitations on flooring types. These generally try to restrict the use of hardwood, laminate and/or ceramic. In some developments, hard surfaces are allowed but only in some rooms. In others, laminate is allowed but the rules put a minimum on the thickness of foam padding between the flooring and the concrete slab.
In the event your condo or strata does not have specific limitations on flooring types, check if alterations or renovations require the approval of the corporation or council. If there are any, you’ll need to rely on other sources of information to find out if renovations are easy to get approved. The quickest source of information is your realtor who may have heard anecdotes through the grapevine. Otherwise, you can ask current residents of the building.
Each condo development has different insurance coverage in case of serious damages (ie water leak, flooding, fire). This is paid through monthly condo fees and covers the envelope of the building and the common areas.
Once you place an offer or take possession of the condo, check what is and isn’t covered by this insurance. Depending on how the bylaws are worded for insurance, you may be liable for certain types of damages. The common one being water damage: most developments will hold you liable for water escaping your unit in case of negligence.
Other developments will hold the unit owner liable for damages that spread from a unit to another and/or the common elements. Some go even further and don’t differentiate between negligence or carelessness.
After learning what is and isn’t covered, adjust your home insurance policy consequently. Water and fire damage adds up to astronomical sums. In high rises, the risk is amplified the higher up you live. You can read more on the topic of condo insurance in this article.
Wrapping This Up
Once you’re ready to place an offer, make sure you add a condition that gives you a chance to review the condo documents. Go through the declaration and bylaws and look for anything that you aren’t comfortable with.