Is It an In-law Suite or An Apartment?

  Does it matter what you call it?

 Not really. For some it’s a basement apartment, for others it’s a second unit, a  granny suite or an in-law apartment. Regardless of the name, and even though a demand exists for in-law suites, most basement units in single family homes are not legal due to zoning restrictions.

As well, some 2nd units are on the main floor.

One home in mind had a new second unit built on the main floor, but not all of it was built with approvals. The owners applied for a building permit to convert the attached double, extra-deep garage into a one-bedroom apartment for their daughter. The city, however, would only grant a permit as long as the renovation amounted to additional living space and not an apartment with a bath and a second kitchen. In complying with the building permit, the owner renovated much of the garage area into a livingroom and a bedroom. As the back wall of the finished area did not extend to the entire depth of the garage, the back portion remained unfinished. On final inspection, the city approved the newly renovated space. Thereafter, the owner disassembled the back wall of the finished area and built a bathroom and kitchen in the unfinished back space.

On listing the property for sale, some five years later, the seller pointed this out to the listing salesperson and directed that it be disclosed as discreetly as possible and only to interested parties. After searching high and low, the couple that bought the home felt it had the ideal setup: a home for them and a main floor in-law suite required by the wife’s mother.

How did the mistake happen?

At the time that the sale was negotiated, the listing salesperson was on vacation and forgot to mention the need for this disclosure to the salesperson standing in for him. The substitute salesperson conveyed to the buyer what she knew: that the seller had obtained a building permit for the renovation.

Within days, the buyer was ready to remove conditions for mortgage financing and home inspection. At this point the seller asked whether the buyer had been informed of the kitchen and bath being added after the final inspection and approval by the city. On explaining she herself was not told, the salesperson advised of her obligation to disclose and the seller, though somewhat upset, understood and agreed.

Regardless, the buyer agreed to proceed.

The salesperson immediately informed the buyers, their lawyer and the seller’s lawyer of the error. Yet the buyers still wanted the house and signed an amendment to the agreement acknowledging and accepting that the kitchen and bathroom were not sanctioned, making the use of the apartment illegal.  Because such a home setup was hard to find, because they were buying to share ownership with the mother-in-law and since they had no plan to rent it, the buyers agreed take the risk and proceed with the purchase.


Eugene Pilato

Eugene Pilato

Broker of Record
CENTURY 21 Today Realty Ltd., Brokerage*
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