11/02/2012 07:02 EDT | Updated 01/02/2013 05:12 EST

Mtl landlord uses loophole to turn rental units into condos

Tenants of a 49-unit apartment building in Montreal's Notre-Dame-de-Grâce—Côte-des-Neiges borough are worried they could be forced out of their affordable apartments if their new landlord succeeds in converting the property into undivided condominiums.

Building owner Bernard Veilleux is selling off units in the building, despite a moratorium against condominium conversion in the borough.

Sharon Steinberg, who has been living in the building for 27 years, said significant renovations have been made to the building in recent years.

"He carpeted the hallways, changed the light fixtures and changed the system for getting into the apartment building," she said.

In September, Steinberg received a letter asking if she wanted to buy her apartment as an undivided condominium. The asking price is $200,000 — a price she can't afford.

Veilleux told CBC News he wouldn't force anyone out of the building.

"We invest a lot of money," Veilleux said. "Naturally, I'm trying to sell some of the apartments to get back my money."

City councillor Marvin Rotrand said the borough passed a bylaw to prevent affordable rental units from being converted and sold.

"One of the things I've always worked for is to ensure an adequate stock of affordable housing in the neighbourhood," said Rotrand. "Clearly someone's found a way around that."

A loophole needs closing, Rotrand says

Rotrand said Veilleux found a loophole in the bylaw, by selling the units as undivided properties.

Undivided co-ownership means that the building as a whole belongs to both the owner and the owning tenants. No part of it is owned exclusively by any one of them.

In many cases, people exclusively own portions of the building and other parts of it are their shared property.

They also jointly pay property taxes on the building in its entirety.

"We're going to have to now see if we can have a clause somewhere in our bylaw that applies to undivided co-ownership," said Rotrand. "I don't know legally what we can and can't do... but, however, by December I'm hoping that the borough council has its first report back from municipal services."

For Steinberg, a change in the bylaw preventing the conversion of rental properties into undivided condominiums may come too late.

She received a notice that her monthly rent will soon be increased by $135 to cover renovation costs. She says that rental hike may be enough to force her from her home.

Ted Wright, a tenants' rights activist, said drastic rent increases are one way for landlords to try and force tenants out of their properties.