By: Linda Pinizzotto, Founder, President CEO Condo Owners Association
Major problems with short-term rentals; also know as transient rental accommodations. Did you realize that all residential condominiums have a declaration that spells out the guidelines for the condominium. What is really important is clauses related to single-family residence usage because it will prevent residents from rental out rooms to non-family members. The standard is a one year lease on rental units but there could also be a provision to allow no less than six month rental terms. This restriction would prevent owners from leasing out units like rooming houses to students.
Now the question do you know if you have this clause in your declaration and if so, is your Board of Directors enforcing no transient rental accommodations? There are many buildings who have security enforced measures, ie keys that cannot be copied and must be ordered through Property Management. Elevators require fob transmitter access to resident floor which restricts access to other floors. It is common for some transient rentals to leave their keys and fobs in the mailboxes for unit access since mail box keys can be duplicated.
The unfortunate situation now is that many developers of new condominium towers have clauses in the declarations of these buildings allowing short term transient rentals and it is extremely difficult, costly and time consuming for Board of Directors to change their declarations after the fact. The declarations are prepared by the Builders/Developers solicitor and stand in favour of boosting sales and leaving behind the security of Condo Owners by opening doors to transient rental situations.
This whole situation not only hurts these condominium buildings but also jeopardizes our Hotel and Restaurant industry. This issues is a growing concern because of the amount of Condo Owners and 3rd party rental suite companies looking to make more money on a daily, weekly or monthly basis. Ads are popping up on Hotel websites and Property Managers and Security are finding a challenge to keep track of the transient rentals considering the rates of turnover. Some buildings are finding their lobby laced with luggage as guest unload from buses with no information other than the address of their new rental. Owners can open their doors to see maid’s and linen carts in their hallways.
The Condo Owners Association (COA) made a point of referring to “Transient Rental Accommodations” in Stages 1, 2 & 3 in the Condominium Act Review as being a major concern that required strict guidelines in the Act for better protection of Condo Owners. The Ministry of Consumer Services and the Public Policy Forum overseeing the Condo Act Review took it off the table when they received confirmation that it was not a concern from Developers, Builders and many service trades participating in the Review. COA stated a conflict of interest in these recommendations and requested that their concern be noted in the minutes of these meetings. They continue to advocate for a minimum six month rental on all rental leases and restrictions on 3rd party rental suite companies who see high rise condominiums as a huge revenue platform. While declarations can be changed after the condominium buildings are registered, this issue should be dealt with at the onset.
There seems to be too much concern for the sale of the units rather than the successful longevity of the condominium with respect to operations, governance and accountability. The breach of security and increase of service trades to monitor the coming and going of transient rentals, the paperwork relating to furnished suite rental companies and the possibility of more wear and tear on the common elements are being ignored by our Ministry.
The Condominium Act must protect Condo Owners in all aspects and Condo Owners need to make our Government accountable.
There are Superior Court cases where Transient Rental Accommodations have been challenged by the Board of Directors. In 2001 there was a case of Skyline Executive Properties Inc. vs Metropolitan Toronto Condominium Corporation 1280 Major concerns on these rentals challenges security, privacy and could be a negative influence on value. Transient Rentals and their Associated Companies leasing these units do not know the rules of the building, don’t have an invested interest in the building and show little respect for the upkeep. Another issue arises when Condo Owners who contract 3rd party rental suite companies to lease their unit on a sublet situation.
In 2003 George Smitherman MPP was able to have a BILL 78 An Act to amend the Condominium Act, 1998 to limit the use of condominiums by transient tenants preamble.
Bill 78 2003
An Act to amend the
Condominium Act, 1998
to limit the use of condominiums
by transient tenants
Units in residential condominium buildings are increasingly being purchased for the purpose of providing furnished short-term accommodation similar to that provided by commercial hotels.
The commercial incentives for doing so are many and include the avoidance of commercial property and hotel taxes, minimizing investment and operating costs and being indirectly subsidized through the general organization of a residential condominium corporation.
The effect of transient tenancies in condominium corporations is clarified by Macdonald J. in Skyline Executive Properties Inc. v. Metropolitan Toronto Condominium Corporation No. 1280  O.J. No. 3512 (Ontario Superior Court of Justice, September 6, 2001):
The choice of location of one’s private residence is one which is influenced by many discrete factors including security, privacy and maintaining the value of one’s investment. It is not unreasonable for the owners to say that the recreational facilities are less inviting when they run the risk of encountering absolute strangers. Nor is it unreasonable for them to say that the transient occupants treat the facilities as if they belong to a hotel. They have no interest in the long-term upkeep, maintenance and repair. They do not know the rules and they have no vested interest as do owners and long-term residents in abiding by them.
Therefore, Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:
1. The Condominium Act, 1998 is amended by adding the following section:
Leasing or letting for transient use
83.1 (1) No owner of a unit shall lease or otherwise let a unit or permit a unit to be subleased or otherwise sublet for transient use unless the declaration of the corporation contains express authority to permit transient use.
Term of lease
(2) Except where there is a declaration expressly authorizing transient use, the minimum term of a lease of a unit shall be one year.
(3) If a declaration expressly authorizes transient use and there is a lease for a term of less than one year, any notice required under subsection 83 (1) shall be given by the earlier of,
(a) seven days after the unit is leased or the lease is terminated, as the case may be; and
(b) the beginning of any new lease.
(4) In this section,
“transient use” means more than one short-term use or occupancy of a particular unit for a period of less than six months in any period of 12 consecutive months.
2. This Act comes into force on the day it receives Royal Assent.
3. The short title of this Act is the Condominium Amendment Act (Transient Tenancies), 2003.
The Bill amends the Condominium Act, 1998 to prevent owners of condominium units from leasing or otherwise letting them for transient use unless the condominium declaration provides express authority for transient use.
NOW THE QUESTION
Why are Transient rentals coming back and why have New Condominium Towers removed the single family restrictions in their declarations.
The new clauses are similar to the following:
|a.)||private single family residence usage
Depends on each declaration how the wording will read
|b.)||Municipal bylaws use
A board draft a rule to control hotel-like rentals by enlisting the help of their Corporation solicitor
|c.)||Allows transient, hotel-like rentals use
A change to the declaration to change this section would have to be done by the Board of Directors after registration
YOUR LOCAL COUNCILLOR – may be asleep at the wheel – think about that before you VOTE
The Developer has the ability to allow transient hotel like units in residential units by inserting a clause in the condominiums declaration. The building and zoning department at City Hall knows if and when hotel style units are part of the builders plans. Your local Councillor also knows so the question is if they are representing their constituents why has t his issue not arisen at the Local Level for public awareness.
The problems begin on the onset and only grows from there. We have 2 levels of Government who already know – Municipal and the Ontario Municipal Board when transient rentals are on the doorstep of a new condominium yet it is the best kept secret until after registration of a new building when the Condo is exposed to the rental elements.
In order for the Board of Directors to challenge these rentals and change their declaration, it is costly and hits every Condo Owners pocket. No Condominium buildings should find themselves in a law suit to protect the Corporation. Not only do we have condominiums where Developers have slipped in clauses for transient rentals; in some buildings they have maintained ownership of several units themselves with customized clauses only allowing the Developer Owned units offering tenants unfurnished and furnished transient hotel units.
BUYERS NEED NEW CONSTRUCTION DISCLOSURES BEFORE PURCHASE
The Condo Owners Association made recommendations to the Ministry of Consumer Services and the Public Policy Forum in Stage 1, 2, 3 of the Condo Act Review to create more disclosure for Condo Buyers so they are completely aware of what they are purchasing. Disclosures have to be made at the time of purchase and these disclosures cover a variety of important information for all Buyers. Unfortunately, again Condo Owners have not been protected because these recommendations were not accepted by the Ministry.
INTERNET TAKES TRANSIENT RENTALS UNITS TO A NEW LEVEL
We cannot stop the internet and the exposure for transient rentals has run rampant. There are a number of condo units across the City who are listed on hotel sites as providers of “Short Term also known as Transient Rentals”. The cost is less than a hotel unit and with in-suite cooking facilities there is no need for the occupant to hit the restaurants.
How do we stop this issue if our Government is enlisting it and in fact helping it to survive? COA believes the Condo Act Review is not only flawed but Premier Kathleen Wynne and Minister Tracy MacCharles have ignored the needs of all 1.3 Million Condo Owners and 1,000’s of Condo Buyers across the Province of Ontario.
Something to think about in this election.
NOTE: Linda Pinizzotto is also a Real Estate Sales Representative for over 35 years – If you are buying or selling – forget the rest – deal with the best – Linda Pinizzotto