Owning your own place can be quite expensive. Mortgages, monthly payments, utilities, the list goes on! You may be thinking about how you can offset some of your costs, perhaps by turning the use of your condominium unit from residential to commercial use. If you own a condo, however, watch out, because there may be restrictions in how you utilize your unit. Read on to learn more.
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We talked about unique challenges of condo ownership in a previous article. The first step you should take if you are thinking of a commercial use for your condo unit is to see if you can use your unit for commercial use according to your condominium’s declaration, by-laws and rules as well as your municipality’s by-laws (“rules”).
Why are commercial uses prohibited in some condominium units?
Depending on the nature of business, it is likely that the having more people enter in and out of the building can create additional security concerns for the condominium corporation, increase costs of utilities and place more demands on the staff. A condominium unit owner’s property rights are not absolute in that they are subject to the limitations set out in the rules of the condo and the Condominium Act, 1998 and other relevant legislation.
Leasing your condo
Arguably, one of the most common ways in which condo unit owners exercise their ownership right is by leasing their units. Subject to the rules, if you are permitted to lease your unit, you must:
- Notify the condominium corporation that your condominium unit is leased;
- Provide the condominium corporation with your tenant’s name, your address, and a copy of the lease or renewal of the lease, or a summary of it in the prescribed form; and
- Provide the tenant with a copy of condominium corporation’s declaration, by-laws, and rules.1
Similarly, when the lease is terminated and not renewed, then you as an owner must notify your condominium corporation in writing.2
Room and Board House
In Chan v. Toronto Standard Condominium Corporation No. 1834,3 the unit owner, Ms. Chan, leased her unit to persons who were living in the same unit together but who were unrelated and therefore did not meet the definition of “family”. “Family” was defined as a “social unit consisting of parent(s) and their children, whether natural or adopted, and includes other relatives if living with the primary group” and can include occupants who are related4. Ms. Chan’s tenants were friends or those who became friends after living together in the unit. Ms. Chan’s condominium corporation’s rules provided that each unit was to be occupied and used only as a “private single family residence” and “no other purpose”. The Court found that Ms. Chan did not comply with the rules by allowing the unit to be occupied more as a “rooming house” or a “boarding house” rather than as a “private single family residence” [emphases added]:
The court’s interpretation of what is meant by private single family unit clearly restricts leases to persons like Ms. Chan’s tenants who admittedly are not members of a private family unit as interpreted by the court. […]
I find Ms. Chan and the tenant respondents are in breach of s. 119 of the Act, the Declaration and the Rules in that their occupancy is that of multiple unrelated tenants in the nature of a rooming/boarding house and not a ‘single family’.5
If you are thinking of renting your condo unit to tenants, make sure you review the condominium documents thoroughly (we would encourage that you review them with your lawyer) to make sure that you are aware of any limitations.
Transient or Hotel Purposes
In Apartments International Inc. v. Metropolitan Toronto Condominium Corp. No. 1170,6) Apartments International Inc. (“API”) rented the units belonging to unit owners to members of the public for short terms stay of less than three months. The condominium corporation’s rules, on the other hand, prohibited a lease or tenancy of less than three months and that the units cannot be rented for “transient or hotel purposes”. “Transient” was defined as “of short duration […] impermanent…temporary visitor” and “hotel” means “an establishment … where paying visitors are provided with accommodation … and other services”7.
It was held that there was nothing illegal or unlawful in the condominium corporation’s action of enforcing its declaration and rules which prohibited use of units for “transient or hotel purposes”. The rationale for this from the condominium corporation’s perspective was that transient or hotel-like commercial use of units had detrimentally changed the character of the condominium building. Having strangers enter and leave buildings raised security concerns for the building and put extra pressure on the condominium staff8.
Another concern in running a business in a condominium unit is the potential for disturbing the neighbour’s peaceful and quiet enjoyment of the property, which would likely be addressed in the condominium’s rules.
In Dyke v. Metropolitan Toronto Condo. Corp. No. 972,9 a condo unit owner, Ms. Elizabeth Dyke, lived below a condo unit which was occupied by a professional dancer who turned her home into a dance studio. The constant noise emanating from the unit was so loud similar to “constant banging of a hammer”10 that Ms. Dyke could no longer have peaceful and quiet enjoyment of her condo unit and even had to move out of her unit and seek alternative accommodation. Ms. Dyke had successfully sued her condominium corporation for failing to enforce its by-laws and rules particularly against the offending neighbour to prevent noise disturbance and to ensure reasonably comfortable or quiet enjoyment of the property by the unit owner.
Many condominium unit owners may be wondering, “Am I able to use this condo unit for any use other than my own occupancy?” Your first place to start would be to review the Condominium Act, 1998, and your Condominium’s Declaration, By-laws and Rules as well as the municipality’s zoning laws. If you are a first-time home buyer, you should let your real estate lawyer know of your intended use for your unit and be sure to review the condominium’s rules with your lawyer to make sure that your intended use would be permitted by your condominium corporation.
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