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When selecting recreational property for investment purposes, there are specific cautions you need to research when doing your due diligence that could impact negatively on the quality of your investment property. Whether you are buying a vacation home 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. Some of the categories relate to single family homes, and others to resort condos. In all cases, you need a local real estate lawyer familiar with the area to research the issues on your behalf.

For more information on tax, legal, and estate planning strategies, and upcoming seminars on the topic of Buying Vacation Property for Pleasure or Profit, refer to www.homebuyer.ca.

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 your house or condo? Are you restricted to seasonal use? Is there a limit on mobile homes permitted on the property at certain times of the year? Are you restricted from constructing other buildings on the property?

Municipal Taxes
On what basis is the property annually assessed for tax purposes? If a condo property, is it 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 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 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?

Right of Way
This generally means a statutory (legal) right for certain companies, Crown corporations or government departments to use or have access to part of your property. Examples include hydro, telephone, sewer, drainage, dike, and other public access purposes.

An easement is similar to a right of way, but normally is the term used when one neighbour gives another neighbour the right to use or have access to a piece of land, e.g., permission to reach a waterfront by crossing a neighbour’s land. This agreement is put into writing and filed in the nearest land titles office. Alternatively, there could be an easement by the municipality to give access to the public to the lake or river.

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.

Building Schemes
This document is registered by the builder on all lots in the subdivision. It controls such matters as size and location of buildings, and the number of buildings permitted. It can also control the materials used on the buildings (e.g., all shake, shingle, or metal roofs), and sometimes the type of landscaping required. The intent is to have consistency in the appearance of the development.

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 (i.e., 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 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.


To help your research and save you time and hassle, check out our free checklists and forms on our "Worksheet" section, as well as the stats, surveys, and reports, useful links, etc, on our "Helpful Info" section, both shown on the index on your left.

Copyright © 2021 , Douglas Gray, LL.B. All rights reserved. Any reproduction of the material contained in this website is strictly prohibited. E&OE (Errors and Omissions Excepted). Please refer to Copyright and Disclaimer at bottom of website page. Refer to Books section for related information.


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