Demystifying Short-Term Rentals and Divided Co-Ownership
The real estate market is evolving and changing at lightning speed. Divided co-ownership is no exception to this reality, especially since the short-term rentals of condos has increased significantly in recent years.
For information on the latest developments regarding this type of short-term rental, browse this article inspired by episode 14 of the Real Estate in Motion podcast, an initiative of theQuebec Professional Association of Real Estate Brokers (QPAREB). Karl Michel, lawyer, discusses the two main changes brought about by the newTourist Accommodation Act.
The Tourist Accommodation Act
The aim of this new law
is essentially to reduce red tape and costs for users. In this sense, a
property owner who offers at least one accommodation unit to tourists - such as
a bed, a room or an apartment - against payment and for a period of 31 days or
less must now register and obtain a permit for their establishment from the Corporation de l’industrie
touristique du Québec (CITQ).
The owner will have to provide various documents, including:
- Property title
- Proof of civil liability insurance
- Photos to identify the establishment
- Proof of compliance with the municipality’s urban planning by-laws
- Declaration of
co-ownership showing that the operation of the establishment for tourist
accommodation purposes is allowed
Zoning compliance and
verification of the declaration of co-ownership are among the most important
changes for real estate brokers and their clients. Let’s take a closer look!
1. Zoning compliance
A zoning by-law adopted by a municipal council establishes the use of all or part of its territory. For example, the use could be residential, commercial or agricultural. What’s new: to obtain a permit from the CITQ, the owner is now responsible for providing a document demonstrating that the operation of the establishment complies with the urban planning by-laws of the city or municipality.
“Prior to this law, the owner did not have to check the zoning by-laws to obtain a CITQ permit. It is now a requirement. In other words, if the property is in a zone that does not allow for it, the owner cannot obtain a permit. This is a major change,” says Karl Michel. And although a zoning change is relatively rare, this expert reminds us that it is not impossible.
2. Verification of the declaration of co-ownership
The changes imposed by the Tourist Accommodation Act also concern the declaration of co-ownership, i.e., the internal rules of the condo which determine the ongoing obligations of parties to each other.
“One of the most frequent calls I receive is from co-owner syndicates who have to deal with problems arising from short-term rentals. The issues mainly relate to the tranquility of the premises and the respect towards co-owners. [...] In this context, the resident co-owners and the investors may not have the same interests or the same respect for the condo’s common areas. […] Since the syndicate of co-owners is a micro-democracy, it is the majority that determines what can be done or not,” explains Karl Michel.
Nevertheless, he reminds
us that certain mixed-use buildings, such as those located near Mont-Tremblant,
are an exception to the rule since the various possible uses are clearly stated
from the outset. “When you buy a property like this, it’s clear from the start
that short-term rentals are allowed and thus, no one is caught off guard,”
state the lawyer.
Karl Michel, however,
specifies that nothing is unchangeable. In this sense, it is possible that a
declaration of co-ownership may change with time. Thus, a syndicate of
co-owners could make the decision to eliminate short-term rentals, while
allowing longer-term rentals: “An investor would then have the option of
selling or renting long-term, but if their original intention was to rent
short-term, that would no longer be possible,” he confirms.
To learn more about changes in the real estate market, listen to the Real Estate in Motion podcast available on Spotify and Apple Podcasts. This monthly discussion with industry experts will help you remain up to date with developments in the Quebec real estate market.