The client
A Campbell River owner bought a strata unit in a building whose declaration pre-dated 2010, financing the gap between a first mortgage and the purchase price with a private second.
Property
$410,000 strata unit, pre-2010 building, Campbell River
First mortgage
$215,000, 5.65%, 22 years remaining
Private second
$58,000, 9.5% interest-only
Personal income
$5,400/month, before any rental income
The problem
The unit had been rented out for two years without incident, but the strata's own bylaws -- filed with the Land Title and Survey Authority long before either mortgage existed -- still read as an outright ban on rentals. A conventional lender asked to count that rental income toward a consolidation refinance paying out the private second did what any lender does first: it pulled the bylaws.
What the bylaw search showed, and what it missed
- ▸The strata's own filed bylaws still read as an outright rental ban -- nothing in the strata's own records had ever been amended to say otherwise
- ▸British Columbia's Bill 44 amendments to the Strata Property Act, in force November 24, 2022, voided nearly every rental-restriction bylaw in the province outright, with only narrow exceptions for age restrictions and short-term rentals
- ▸A strata is not required to re-file or reword a bylaw the amendment already voided -- the old wording can sit on record indefinitely without meaning anything
Nothing about the unit or the tenancy had changed. What had changed, three years earlier, was the law behind the paper the lender was reading.
The numbers
Once the rental income was confirmed usable, sizing the consolidated refinance was the easier half of the file.
| Consolidating the first mortgage and the private second | Amount |
|---|---|
| Existing first mortgage | $215,000 |
| Private second | +$58,000 |
| New consolidated balance | $273,000 |
| Total debt service | Before (personal income only) | After (with rental income) |
|---|---|---|
| Mortgage payment | $1,416 | $2,023 |
| Property tax + heat | $305 | $305 |
| Private second, interest-only | $459 | -- |
| Car loan | $215 | $215 |
| Total debt service | 44.4% | 40.2% |
44.4% on personal income alone left no real room to work with. Once the bylaw's actual status was confirmed and 50% of the unit's $1,850 gross rent -- $925/month, a treatment each lender sets for itself -- was added to household income, the consolidated file cleared comfortably, well inside what national rental vacancy data would suggest is a normal, tenanted unit.
The solution
A submortgage broker registered under BC's Mortgage Brokers Act treated the bylaw question as the file's actual gate, not a formality to note in passing.
First, pulled the strata's current bylaws and confirmed the rental restriction's exact wording and filing date -- pre-2010, with no amendment on record since.
Second, confirmed the restriction fell inside Bill 44's void list, not one of the narrow surviving exceptions for age restriction or short-term rentals, and put that confirmation in writing for the file.
Third, presented both documents to underwriting together -- the bylaw as filed, and the statutory provision that had already voided it -- rather than leaving the underwriter to read a rental ban at face value.
The outcome
The consolidated refinance funded at 5.65%, retiring the first mortgage and the private second at $273,000, with the rental income counted and total debt service at 40.2%.
Because this is an uninsured consolidation refinance, CMHC's ratio maximums do not apply directly; the 40.2% figure is informational.
What to take from this file
- 01British Columbia's 2022 Strata Property Act amendment voided nearly every rental-restriction bylaw in the province -- even where the strata's own filed bylaws still read as a ban.
- 02A strata is never required to update its own paperwork once a bylaw is voided by statute. The old wording can sit on file indefinitely; check the amendment's date and exceptions before assuming a rental ban is real.
- 03Bring the statutory override to underwriting in writing, alongside the bylaw itself. A bylaw search alone reads as a ban; the file needs both documents to read correctly.
- 04The narrow exceptions still matter. Age-restriction bylaws and short-term-rental bylaws can still stand -- confirm which kind of restriction is actually on file before relying on the 2022 amendment.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸5.65% / 9.5% rates — rates move daily; neither is a quote.
- ▸50% of gross rent counted as income — each lender sets its own rental-income treatment; this file did not need to litigate which is correct.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.