I met with a client the other day and she was distraught over the idea of having to sell her condo because she needed a larger home and her strata rules forbid rentals. My client was wanting to use the equity in her property to buy a second, larger property for her growing needs and keep her smaller property as a rental until market conditions recovered. The trouble was her strata rules limit the number of rental units in her building. With the resale market in her area weak, she could potentially be forced to sell at a much lower price than she would like to or be forced to stay in a home no longer suitable.
I suggested to her she look into rent-to-own. Rent-to-own can be a win-win situation for both a buyer and a seller since you offer the opportunity of home ownership today, and they offer you the exit of your property at a fair price. Most important is that since it is classified as a deferred sale, it is not considered a rental in the eyes of the strata not forcing you to have to sell in a bad market.
The basic premise is that someone is interested in buying your place but their current credit score and/or down payment is not sufficient enough to qualify for conventional financing. You structure a rental or lease agreement in such a way as the buyer pays market rent plus a premium of say $300 that goes towards the purchase of your property. You also take a down payment of some sort depending on how much they have to offer. You state in the contract that in say 3 years time they must purchase your property for the future market price or today’s appraised price whichever is higher. If they do not transact the purchase they forfeit their monthly premiums and down payment.
There are a number of good websites on structuring rent-to-owns but no matter what you do you should always seek professional council on structuring such deals.
Section 144 of the Strata Properties Act of BC allows rentals when there is a rental restriction bylaw for reasons of hardship. See below:
The client may be able to make use of this provision.
144 (1) An owner may apply to the strata corporation for an exemption from a bylaw that prohibits or limits rentals on the grounds that the bylaw causes hardship to the owner.
(2) The application must be in writing and must state
(a) the reason the owner thinks an exemption should be made, and
(b) whether the owner wishes a hearing.
(3) If the owner wishes a hearing, the strata corporation must hear the owner or the owner’s agent within 4 weeks after the date the application is given to the strata corporation.