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July 01, 2008

Condo Concepts - Ready for takeoff

Tips on buying a resort condo

Douglas Gray

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Whether you are buying a vacation condo for rental purposes only, a combination of personal use and periodic or seasonal rentals, or personal use with a long-term hold plan, the following points are applicable in many purchase scenarios. You need a local real estate lawyer familiar with the area to research the issues on your behalf.

 

Local Zoning and Building Restrictions and Opportunities
Check for restrictions on use and other matters. For example, is there a community plan? What type of zoning bylaw is there, and is it subject to change? Is there a rezoning potential for higher or different use? Is there a land-use contract? What about non-conforming use of older or revenue buildings? If you want rental revenue to help pay for your annual expenses, or as an investment property, are nightly or weekly rentals to tourists permitted for the condo? Are you restricted to seasonal use?

Municipal Taxes
On what basis is the property annually assessed for tax purposes? Is the condo zoned commercial rather than residential? If the former, the property taxes could be three times the residential rate. Many condos in hotels or in core areas are zoned as commercial or could be at some future point. Have your lawyer check this issue out thoroughly, as it will have a dramatic impact on your bottom line.

Property Management
Are property rentals restricted to a specific property management company, or do you have complete autonomy as to which company you use? If you are restricted to use the company designated by the developer, what are the terms and do the numbers work for you? Can you rent out the property yourself? Are you obliged to put your property in a rental pool for a fixed period of time each year?

Restrictive Covenants
A restrictive covenant limits the use of a property for the benefit of another property, the municipality, or the provincial or federal government (the Crown). These restrictions can include such matters as the number and location of buildings, cutting of trees, septic fields, subdivision of the land, and allowable uses of the land. A builder could also place a restrictive covenant on the property.

Waterfront Boundaries and Restrictions Properties bordering a water body such as a lake, river, stream, or ocean have special boundary issues you need to research. When you have a survey of land, you have precision. A natural water boundary lacks this type of precision, so there are various tests and formulas used to determine where private property ends and where the government rights begin (in other words, Crown land).

You need to check on what local, provincial, or federal restrictions there are to regulate the use of marine areas adjacent to private property. The purpose of these provisions is to control the construction and use of private floats, breakwaters, docks, sea walls, and the commercial or industrial use of the foreshore.

In these scenarios, the government’s concern is that the above types of structures or use could impair the aesthetics of the view from the land and sea, or impede the ability of the public to walk along the foreshore.

Waste Disposal
Is the property connected to a muni­cipal sewer system? If not, does it have a septic tank or another type of system? What about other types of waste disposal, such as garbage pick-up and recycling—are these services available, or will you be required to make your own arrangements?

Land Claims
Are there any current or potential First Nations land claims issues? Who owns the mineral rights, not just the surface rights to the land? Who owns the surrounding treed areas? It could be Crown land or leased to a forestry company.

Access
Is the property accessible year-round or seasonally? Who owns the roads with access to the water? Is it muni­-ci­pally owned or private owned, and if the latter, who maintains the road, and what would the annual cost be?

Wild animals
Is the area that you are considering the natural habitat of wild animals such as deer, bear, fox, cougar, etc? Are you comfortable in that environment?

Excerpted with modification, from 101 Streetsmart Condo Buying Tips for Canadians, by Douglas Gray, published by John Wiley & Sons in May, 2006. Copyright 2006 by Douglas Gray. All rights reserved. Any reproduction of this material without the author’s advance written consent is prohibited. The author assumes no responsibility whatsoever for any informa­tion provided above, as the purpose of the column is for general information only, and not intended to provide professional advice.

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