Many homebuyers consider purchasing a property with an existing or potential for a second suite. First-time homebuyers in particular often hope to take advantage of the extra income a second suite, often a basement apartment, can generate. Financial advantages can be great, but the buyer needs to know the legal implications.
Your client or customer may have many questions regarding the legalities and financial implications of creating or operating a rental unit. REALTORS® should refer them to their lawyers or accountants for legal or financial advice, but REALTORS® still have an obligation to disclose material facts.
Whether a suite is a legal second suite will depend on building code and fire code issues and municipal zoning bylaws. Although bylaws across Ontario are generally similar, each municipality has its own variations.
For example, while the town of Bolton encourages basement apartments, in neighbouring Brampton, only basement apartments built before November 16, 1995 are legal, and these units must be registered with the city. Basement apartments in Brampton built after that date are illegal. Any landlord that violates this bylaw faces fines of up to $50,000 and one year in prison. REALTORS® should encourage their clients to visit a municipality’s website, or to speak to a lawyer located in the area.
If a buyer intends to create a second suite, he needs to determine whether the home qualifies under the bylaws of the specific municipality. If the home does not meet these requirements, the potential buyer must determine whether he is willing to make the necessary changes to create a legal apartment. A building permit is always needed, even in cases where construction will not be taking place.
Any construction plans are approved based on zoning requirements, safety systems and building issues. Once a second suite is introduced into a home, a General Inspection for Fire Code Compliance must be completed by the Electrical Safety Authority. The inspection reviews both the owner’s unit and the rental unit for fire code compliance.
If a home currently has a second suite, it is important to determine whether the existing unit meets the municipality’s requirements. The municipality will inspect the unit to determine whether it is fit for habitation and whether it meets established standards. Both new and existing units require a General Inspection for Fire Code Compliance.
*Please feel free to contact Brad Stevenett @ 905-407-7381 or by email @ firstname.lastname@example.org to set up searches for properties with "income generating" second suite's in your neighbourhood.
***Information found at OREA.com***