# Tenant in unit that was purchased with owner-occupied mortgage



## GalacticPineapple (Feb 28, 2013)

I'm renting out a condo that I bought with an owner-occupied mortgage in Alberta (it used to be my home). It's an all-in-one mortgage, so I'm going to lose all kinds of flexibility if I refinance to a conventional mortgage, not to mention the legal and appraisal fees.

Should I get this properly financed right away or is this not a big deal? Am I driving 52 in a 50 zone, or 78 in a 50 zone?


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## Berubeland (Sep 6, 2009)

Did you ever occupy the property? 50 in a 50 zone.

Did you get the mortgage knowing full well that it was going to be a rental and falsify mortgage documentation? This is mortgage fraud and if you ever default you will be up the creek without a paddle. Also do no answer this question on the forum as it could be used against you in a court of law.


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## Rusty O'Toole (Feb 1, 2012)

It's a non issue as long as you make your payments. This is done all the time and I never heard of anyone getting in trouble for it.


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## MRT (Apr 8, 2013)

You are fine.

"Fraud" comes into play when you sign as owner-occupied, but never occupy it and instead rent it out. There could also be an issue if you occupied for a very short duration and then rented it out (but even then, it is difficult to prove that you were misrepresenting yourself during the purchase and mortgage process).

You are not obligated to maintain the property as owner-occupied for the duration of the mortgage, and you are not obligated to refinance and qualify it as an investment property midway through (or even upon renewal). If you transfer or refinance the mortgage with another lender you ARE obligated to disclose occupancy details.

As noted, the bank essentially cares that the payments are made and that their CMHC insurance coverage (if applicable) isn't jeopardized.


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## GalacticPineapple (Feb 28, 2013)

*anazcar had*

Thank you for the replies everyone.


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## Berubeland (Sep 6, 2009)

I was reading about a year ago that there was a big fraud out west where landlords claimed the properties were owner occupied. It was only part of the fraud thought, there was also some abuse of the automated mortgage evaluation system and straw buyers mixed in there. Of course I can't find the article just now. 

Just because banks are not enforcing this now doesn't mean that they won't ever enforce it. Not to mention if properties de decline in value some of this paperwork may well be looked at a little more strenuously


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