Arnold Shuchat PREC Real Estate Blog


Strata Bylaw Rental Restrictions: Binding?

Sifting through investment properties is often tedious.  Not every Realtor has access to a strata's bylaws at the very start of his mandate.  Sometimes the documents take time to obtain.  Accordingly, a computer filtered search requesting "rentals, no restrictions, or rentals-some restrictions" may not yield accurately described listings.

Buyers are cautioned to review strata Bylaws themselves in detail and even seek legal advice to avoid these inaccuracies entering into an investment decision.

The recent Court of Appeal case of 
Mathews v. The Owners, Strata Plan VR 90, 2016 BCCA 345  addressed the issue of the clarity and force of law of rental restrictions contained in strata bylaws.

I have been asked in every investment mandate I have had, whether the hardship provisions which may be contained in strata bylaws could be used as a reliable lifeline in the event an investor may need to rent out a unit due to changing circumstances. The answer has now become more definitive as a result of the above case, and the court has ruled with far more clarity than in the previous Supreme Court of British Columbia flagship case of Carnahan v. The Owners Strata Plan LMS522, 2014 BCSC 2375  in favour of the strata's right to enforce rental restrictions in its bylaws without necessarily having to set out criteria as to how their discretion will be exercised.

As a consequence, if you are looking to purchase an investment property and are thinking, that in the worst case scenario you can always go for a "hardship rental" application to the strata so as not to be out money if a family member moves out, be forwarned.  It is not safe to do so and you will not have luck before the courts, barring some form of proveable bad faith argument on the part of the strata council, or a poorly drafted Bylaw that might be struck down by the courts. I would not want to rely on either of these avenues when calculating my investment risks.

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