May 5th - 2015

Rules vary for basement apartments, second suites

Be cautious in your approach to properties with basement apartments, second suites or in-law suites. That’s because the laws vary across the province and can be a legal minefield.

Basement

Be cautious in your approach to properties with basement apartments, second suites or in-law suites. That’s because the laws vary across the province and can be a legal minefield.

BasementOntario REALTORS® should be cautious in their approach to properties with basement apartments, second suites or in-law suites.

That’s because laws about these units vary across the province, according to the government relations department at the Ontario Real Estate Association (OREA).

Provincial legislation amending the Planning Act came into effect in 2012. It required municipalities across Ontario to implement zoning bylaw provisions and official plan policies that allow for second suites or basement apartments within detached and semi-detached homes and townhouses, as well as inside of accessory structures such as a laneway garage.

In a market where the supply of rental housing is limited and the population is growing, second suites can increase density, generate new rental housing, and provide options for extended families, as well as help homeowners defray their housing costs.

However, the province views municipalities as autonomous and has therefore not imposed blanket standards across Ontario for second suites -- except to say that they must comply with the provincial building code, fire code and local bylaws. Each municipality has been left to make its own rules. This poses a challenge for REALTORS®, especially those who work in multiple jurisdictions.

"Basement apartments that were in existence prior to 1995 were 'grandfathered' with respect to zoning requirements"

To add to the confusion, basement apartments that were in existence prior to 1995 were “grandfathered” with respect to zoning requirements. That means that pre-existing units may be exempt from some new rules or restrictions because the units predated the change.

REALTORS® who are working with buyers and sellers throughout Ontario should be aware that there is a patchwork of municipal bylaws in place, and they are often complex and detailed. A number of municipalities have not yet revised their bylaws to incorporate second suites.

Determining whether a second suite is legal can be a minefield. In Mississauga, for example, the city is licensing second suites, but that license is non-transferable. That means that if the property is sold, the new owner must re-apply for a license. Other jurisdictions require a rental housing license for homes with second suites. In Toronto, no license is required, but the suite must meet residential zoning requirements, property standard bylaws, occupancy standards, fire and electrical codes and health and safety requirements. 

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President’s Message from Patricia Verge

REALTORS® are not required to be experts on second suites, but they must be straightforward with their clients./p>

How can REALTORS® cope with such a potpourri of requirements and bylaws? One key is to remember that REALTORS® are not required to be experts on second suites, but they must be straightforward with their clients. They can’t misrepresent the property or its income potential. If they know a suite is licensed, they can say so. If they are not certain of the legality of a second suite, they must make that clear to the client.

The industry regulator, the Real Estate Council of Ontario (RECO), is especially concerned about registrants who misrepresent properties in their advertisements. Again, being straightforward is vital. Listing representatives cannot advertise a guaranteed second income unless they can demonstrate that the suite is legal, which is a challenge, given the existing bylaws. If a second suite is not legal, the most a registrant might be able to do is advertise a home with a second kitchen.

It is crucial that REALTORS advertise only what the property is now -- not what it has the potential to become.

The buyer’s representative should diligently research the zoning bylaws in a particular municipality. The buyers must be perfectly aware of what they are purchasing. It is imperative that they not be led to believe that a second suite is legal, based on a real estate advertisement or listing or otherwise. Registrants should also advise their buyers to discuss any potential second suite with their insurer and lender.

Remember these three keys when working with second suites:

  • Know the laws in your municipality
  • Be aware that the fire code and building code are constantly changing
  • Don’t misrepresent a property

Resources:

1. Canada Mortgage and Housing Corporation (CMHC)

2. Ontario Ministry of Municipal Affairs and Housing

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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