Renting out your condo isn't as simple as placing an ad, says leading mortgage broker David O'Gorman, of the GTA's MortgageLand Inc. There are very real liability and insurance considerations that can and often do crop up. Here are the top nine ways to protect yourself.
1) Do you have tenant insurance? If the tenant leaves the tub running and it overflows and causes damage to the unit below/beside your unit, who pays for the damages? Did your tenant start the fire that damaged other units and common areas? Who pays for it? Sure the tenant may be legally responsible, but who will the other unit owners or the condo corp. turn to sue or write the cheque? You, the unit owner. If a tenant had significant financial resources, would they be a tenant? Don’t be cheap, protect yourself, talk to your insurance broker.
2) Don't lien on me. Are you aware that if a tenant causes any damage to common elements, or other units, the condo corporation can register a lien against your unit for payment of any amount? Are you aware that the condo lien takes priority over everything except property taxes? Are you aware the lien registered by the condo corporation can be considered a default by a mortgagee and the mortgagee may then commence legal action against you?
3) Check condo by-laws before doing any rental. Some condo by-laws do not allow for short term rentals (one week to 51 weeks).
4 )Did you do a credit check on your tenant or have them print a copy of their own to give you? Did you ask for and check out current and past employment? Did you ask, get and verify two /three personal references? At least one relative and one long term “friend.” Get their names, addresses, phone numbers and email addresses and verify them before you agree to rent the unit. Google tenants 1) name 2) former address 3) employment. What comes up?
5) Get the tenant’s e-mail address(es) & then agree in writing that they will keep you advised of changes of their email address and that you may communicate with them via email.
6) Did you give the tenant a copy of the condo by-laws & have them sign an acknowledgement of receipt? In Ontario this is a requirement under the Condominium Act. Did you advise them in writing that you would advise them by email of any changes to the by-laws? Did you follow up, by sending the changes in a reasonable time? Tenants must follow the condo rules the same as an occupying owner.
7) Do not rent out individually key-locked bedrooms rooms, like in a boarding house. It is probably a violation of the condo by-laws, municipal zoning and the fire code. Do not allow your tenants to sublet rooms in this manner. Well-run condo corps will inspect units once a year, or find a reason to inspect suspicious units (building/fire inspection).
8) Putting good tenants in your condo rental units is a good long-term investment. Tenants who cause excess wear & tear/damages to a building are a cause of increased condo maintenance fees. Higher condo fees impact the marketability of units & impact the value of the unit.
9) Could this be your tenant?
In this case charges have been laid by police. All individuals are presumed innocent until found guilty in a court of law. Conviction on any charge is not required to register or enforce condo liens.
It is alleged:
“The tenant of a unit in a large condo complex, more than 250 units, went out on “a night on the town”. When the bars closed the tenant invited a number of “new friends” met in the bars, back to the condo unit to continue to party. When they got to the vestibule of the building the tenant noticed he/she forgot/lost the keys to the unit. One of the “new friends” suggested that they break into the red “fire box” in the vestibule (in full view of a security camera) to get a key ( it’s a master key for the whole building intended only for the use of the fire dept.). The next morning the property manager discovers damage to the “fire box” & missing keys, he reviews security tape & calls police. The police investigate & lay a number of charges against the tenant. Tenant cannot remember names or identify any of the “new friends”. Police recover the master key but have no way of knowing if the key was copied. The condo corp. is considering registering a $70,000.00 condo lien against the unit, to recover the cost of re-keying the whole building.”
We will have to wait to see what comes out of this case.
A significant number of condo corps/boards and their law firms are taking very strong stands with condo landlords over damages that can be traced to a specific tenant.
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