Whistler Phase 2 Investors – Please Do Your Homework

BAW4.2For those of you who own or are thinking about buying Whistler Phase 2 real estate, it is critical that you read the restrictive covenant  that the City of Whistler attaches to your purchase.

Why?

Because this document is actually an additional contract that every Phase 2 buyer enters into when they buy property. So, not only do you have a contract with the seller but you have an ongoing contract with the Resort Municipality of Whistler (the RMOW) that governs many aspects of how you can and can’t use your property. While on the surface these covenants make sense and intend to balance the owner and guest experience, they require City oversight.

Again why?

Any time you enter into a contract with somebody, the success of the relationship has much to do with proper analysis, good faith on the side of both parties and the proper adherence and administration of the agreement that both entered into.

So this is where is gets interesting. Whistler Phase 2 real estate is a very common model for owning real estate in Whistler. It is most often associated with hotel and condo type projects like the Four Seasons, Westin, Pan Pacific and many others in Whistler. In fact, the estimates are that close to 5000 units in Whistler are Phase 2……which again……means that the buyer has a restrictive covenant attached to their purchase by the City.

The restrictive covenant that was part of our Phase 2 real estate purchase at the Nita Lake Lodge can be found here. Contained in it are examples of the types of restrictions that the RMOW places on usage and governance. For example we can use the units up to 28 days in the summer and 28 days in the winter. When the property is not being used by the owner, it should be placed in a rental pool to be managed by a single manager. That manager is supposed to be approved by the City of Whistler.

So now it should seem very apparent as to why Whistler has clear oversight responsibilities to ensure that this real estate model works.

So what happens when an aggressive investor decides to unilaterally appoint himself manager of a development (without approval from other owners or the City) then proceeds to rent owners rooms for over a year and pays them nothing? This same manager then suggests that he is allowed to do this because the Whistler Phase 2 covenant says that their can be only one manager, so he conveniently interprets this to mean that it must be him and that other owners must make their units available to him to rent or be locked out (as we currently are).

I know this sounds crazy but it has happened to us. This deliberate abuse of the Whistler Phase 2 covenant, gone completely unchecked by the City, has rendered our property unusable and almost worthless.

So why would anybody else buy this type of real estate when the City of Whistler won’t do what is required to make their own real estate model function properly?

We have asked the City several times to please get involved. We have asked them to please confirm that their covenant was not meant to be abused in this way. They say nothing.  Perhaps they worry that any response will simply open Pandora’s Box to a whole host of disputes at other  Phase 2 projects. Well avoidance isn’t a good long term strategy, especially when it is your covenant to administer and enforce.

Moreover, if you read the covenant, you will find that the City of Whistler has included a variety of language that gives them the latitude to intervene and take action when their own covenants are misused. Only by doing this will they restore investor confidence and bring stability back to the model.

Until then, Whistler Phase 2 real estate is simply to risky of an investment.

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