Whistler Covenant – Please Just Administer It

BAW4.2After last weeks article in the Whistler Pique, we received some feedback from Whistler locals, real estate agents and local business owners. We thank people for writing in.

It seems that some have interpreted our message to the City of Whistler (RMOW) as us asking them to get rid of the Phase 2 covenant altogether. Absolutely not – and we are glad we get this chance to explain and clarify.

We understand the purpose of Phase 2 covenants. And we’re not seeking to alter the basic ground rules in our project around availability of units for guests.  Units built and sold as Phase 2 units should remain rental units for visitors, and whenever possible, so long as things are operating as they should, covenants should operate as intended.  When the model is working, the covenant properly balances the interests of owners, managers and Whistler tourists.

However, since this covenant is rarely enforced and opportunistic business people have come to know that the City of Whistler is generally likely to avoid any situation with controversy around their covenants, it has created an environment where serious abuses can take place.

Our situation at Nita Lake is a good example. We have a manager that believes that because he appointed himself as manager, and the Phase 2 covenant says there can be only one manager, he can terminate our rental pool management agreements, dictate his new terms to minority owners and if they don’t agree, lock them out of their rooms.  He then makes a fundamental mistake and thinks the covenant is his to enforce and  says “if he can use them then no one can.”  In addition to taking it upon himself to lock unit owners out, he’s seeking an injunction under the covenant to force owners to work with him.  

We believe, as a legal matter, there are more than a few obvious problems with this.  For one thing, the covenant is a contract between the RMOW and the unit owner.  It’s not an agreement with the manager, and we don’t believe the manager should have the right to assert someone else’s rule as the basis for a lawsuit by him.  If Whistler’s covenant is to be enforced against unit owners, that would be Whistler’s call.  Another concern:  nowhere in the covenant does it provide for an injunction forcing people to give their property over to a manager.  That is the kind of relief that courts should be loathe to require, especially when nothing authorizes it.

Perhaps most important:  if you were Whistler City Council would you feel good about your rules being used this way against individual owners?

We’d really like the units we own to be part of a well-functioning project. But after this unit owner appointed himself manager, rented our rooms for over a year and didn’t pay us anything, and then locked us out it’s a little difficult to feel that working with him is appropriate, or much of a good idea. Read Peter Kosick’s blog, study this manager’s history and see how this manager is operating.  Ask yourself, if you owned a unit in this project would you want to be forced into an agreement with this kind of manager? Why would anyone want to work with such a person?  We don’t.

This manager justifies all of this behavior saying the Whistler covenant authorizes everything he’s doing.

But this is where is gets interesting. When the City attaches covenants to Phase 2 properties, it has a responsibility to administer and enforce their own rules. Why? They (the RMOW) are supposed to be the referee for the covenant.  For one thing, it is a requirement of the covenant that the RMOW approve the manager, which makes sense because it’s in the RMOW’s interest to have well-functioning projects in town. Abusive or unqualified managers send a message that the market is unstable. The RMOW also left itself room in its covenant to temporarily release units, without getting rid of the covenant. This language can only have been written into the covenant in anticipation of difficult circumstances.  Our situation clearly presents such circumstances.

The City acts as though it has nothing to do with this situation.  But its real choice is whether they sit on the sidelines and do nothing, while a predatory investor uses Whistler rules to turn one of Whistler’s most promising and unique Phase 2 projects into a big public billboard about all that can go wrong with Whistler real estate, or whether they simply do what the covenant allows them to do: provide clarification and short term relief where an exception should exist.
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Some projects in Whistler have more than 1 manager. and in some cases those projects are not in compliance with the covenant either. But there, everyone has found a way to work things out, and at least those unit owners can use and rent their rooms until a better situation is identified.

That isn’t happening here.  We are locked out of our property by someone who claims the RMOW’s rules authorize him to do that, while the Mayor and City Council do nothing.

We know from speaking with some members of the RMOW leadership, they want to help.  To them we say this:  please get involved.  People around the world are watching.  This isn’t a problem about a single real estate project.  This is about leadership.

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