Artscape Triangle Lofts is a very unique condominium development. It has been created with the specific purpose of preserving important artist work/live space in the Queen West Triangle. Artscape Triangle Lofts includes a mix of affordable rental units for professional artists as well as below-market ownership units for artists and non-profit arts professionals.
I have been working with one such “qualifying artist” to try and find a lender who would finance this unique project. Aside from the Artists Credit Union, it was very challenging to find a lender who was willing to finance my client’s unit in this building. I approached all the institutional and private lenders I work with and the application was rejected for one of two reasons, unique to this project:
1- The city is subsidizing part of the purchase price for qualified low income purchasers through a loan (2nd mortgage) in the amount of 20% of the purchase price. This loan bares no interest and doesn’t need to be repaid until the unit is sold. This allows purchasers to buy without CMHC insurance premiums and of course lowers their mortgage cost. Most institutional lenders don’t like having a second mortgage registered behind their first and therefore won’t approve purchasers who are relying on this subsidy as part of their downpayment.
2- When the existing owner wishes to sell the unit, they have to give Artscape an opportunity to find another ‘qualifying artist’ to sell to so as to maintain the building as a live/work space for artists. Artscape is maintaining a waiting list and if no seller is found within 90 days the unit may be listed on MLS. From a lender’s perspective this is a messy arrangement and limits the marketability of the property greatly.
In the end I was able to find one progressive lender who was willing to lend my client the money and at excellent market rates.
Whether you are looking at Artscape Triangle Lofts or another unique project like a condo/hotel arrangement like at the Thompson Hotel or 1 King W., it’s important to be aware of the effects that limited marketability have on your ability to finance your purchase.
If you are buying at Artscape Triangle Lofts please don’t hesitate to give me a call to discuss the challenges of financing. I’d love to help!