Can a condo be rented out indefinitely?

I was recently asked the following question by a client: “If I buy a condo in a complex that allows rentals now, can the rules be changed later so that I can’t rent it out later?”

This is an important question for someone who is looking to buy a condo/townhome as an investment property. It’s also worth considering for people who are looking at buying a strata as a starter home as well if you take into account  my views on selling real estate.

The answer is most succinctly taken care of with a “Yes, but…” yet this is one of those matters which deserves at least some exploration of detail.

My reply, edited for the purpose of this blog, went like this:

The following is going to be pretty dull to read. Boring as bat…uh… guano. But it’s worth wrapping your head around if you’re thinking of investing in a strata. In particular, I’m focusing on being a landlord for a strata unit but it outlines some important concepts that any owner of a strata unit need to understand whether they’re living in it or not.

So, to answer your question: Yes, it can be changed. Condos, townhouses and the like are run by organizations which we call “strata corporations” which is an organization/corporation that you buy into when buying a unit in a given complex. Each strata corporation has a variety of bylaws which they adhere to. There is a standard list of bylaws that I will call “government issued” for the sake of brevity and which can be changed within the realm of what is legal in our area to suit the needs and tastes of the owners/members of the strata corporation.

Changes like that are the result of a decision within the strata corporation which as a unit owner you can participate in a vote on this and other policies/bylaws that may be changed. This is an example of why it’s good for a strata owner to keep up to date with what is going on in the strata so that you can see these things coming ahead of time and hopefully influence things one way or another should such a change be proposed. It is most likely that if the bylaw in the strata is changed, that there will be a limited number of rentals allowed as this is quite common and as you’re already renting it out you should be on that list. In the case that a place decides to get rid of rentals altogether they will usually “grandfather” (continue to allow the old way) the existing rentals until an owner (be it you or a new owner) lives in them. How this is handled will again, depend on how things are voted upon so depending on what the mentality of the group is overall will affect what sorts of policies are made.  In my eyes, it’s a mini democracy.

Staying up to date on strata goings on isn’t just about this sort of thing and other matters of bylaw after all. You also want to make sure that they are using their money effectively, and in particular, I mean making sure that they are saving up for future repairs that may need to be done. For example, an older building may need a new roof, or new siding and windows in the near future before they start to leak and allow (expensive) water damage to occur. This is something that is usually an educated guess in regards to exactly when it will need to be done, but you can generally see it coming. (Yes, there was also the issue of leaky condos built in the 90’s. That’s another discussion.) Generally, this is a non issue but sometimes strata owners are too interested in saving a few bucks every month on strata fees when they should be raising them to save up for upcoming repairs and maintenace. The result of bad planning like this increases chances of getting a large special assessment fee (i.e. repair bill) that is the owners all have to contribute to.  Sometimes it goes the other way and the various owners decide to get overly expensive repairs done. Usually it’s neither of these and keeping up to date with what is going on and being involved in the process is how one keeps the group from swaying too far one way or another.

Thinking about all of this might make one wonder if it’s easier to just buy an inexpensive house and not have to worry about all this bylaws, management and voting. That is, in my eyes a reasonable observation. The upside with owning your own house is that you don’t have to share decision making with others. However, it should be pointed out that with a house, you will still have to make decisions on maintenance which means always figuring out who to hire to do what when and how much it is worth to you. That’s a lot to think about too and you don’t have people managing the process for you who will give you necessary info to help you make informed decisions.

Another consideration with a house is that a wild tenant might have more freedom to live carelessly on your property before getting noticed by anyone.

So, which way is better? I’m not sure if either is better. They’re just different.

Ryan Coffey