By Mark Weisleder – Toronto Star MoneyVille
Many first-time buyers need income from a basement apartment to help carry the costs of their home. So it’s important that buyers understand their rights and obligations affecting these units or any other second suite that they create in a home.
Here are the key questions:
• Is the apartment legal?
• Does it comply with fire code retrofit guidelines?
• How do you find a tenant?
• What can you ask when interviewing potential tenants?
• How do you conduct reference checks?
The main benefit of a legal basement apartment is that it can provide you with additional income and likely increase the overall value of your home. But it must comply with the local zoning by laws and fire code. If it doesn’t comply with both the apartment is not legal. Some homeowners have had to pay up to $25,000 to bring their basement apartment up to code, after complaints from neighbours, or work orders placed on their property by the fire or building department.
You need to check with the city municipal standards department or the Fire Department to see if your basement apartment is registered as a second unit. If it is, then it is legal and it complies with the fire code. If it is not registered, then you have to conduct further research
The city zoning bylaw will tell you if your area permits a basement apartment. In Ontario, if the basement apartment in your home has been rented since October 31, 1995, then it is legal even if the zoning by law now does not permit it.
A City of Toronto “second suites bylaw passed in 2000 permits second suites in all single-detached and semi-detached houses throughout the city with certain conditions. They include:
• The second suite must be self-contained with its own kitchen and bathroom;
• the house, including any additions, must be at least five years old;
• the floor area of the second suite must be smaller than the rest of the house;
• in most cases, a home with a second suite must have at least two parking spaces;
• all existing second suites must comply with the Ontario Fire Code, zoning and property standards.
If you do not meet these conditions, you must apply to the City for permission to create your new basement apartment unit. In other cities, such as Brampton, Mississauga and Vaughan, zoning by-laws do not permit basement apartments, so unless you had a unit created prior to November 1, 1995, you will need to apply to create any new basement apartment.
If you want to apply for a new unit, you will need a building permit that satisfies the provisions of the fire code.
The Fire code has four basic requirements:
• There must be adequate fire separation – this means that if a fire starts upstairs, it must take at least 30 minutes to reach the basement;
• There is a separate exit;
• There are smoke alarms; and
• An electrical inspection must be completed to ensure that there is sufficient electricity to service all occupants in the home. In Toronto this is done by the Electrical Safety Authority.
In addition, the basement apartment must also have a minimum ceiling height of 1.9 metres, a door that is 0.8 metres wide and 1.9 metres high. The bathroom must also have a window or exhaust fan
When you are looking at a property, if the basement apartment is being advertised as a “nanny suite”, or “in-law apartment”, do not be fooled. This unit is most likely illegal. If any neighbor complains about your unit to the City and an inspection occurs, you will be required to pay the money to upgrade your unit to proper standards.
You must advise your insurance company if you intend to rent out your basement apartment as this will increase your insurance risk. By not disclosing this information, the insurance company may refuse to pay a claim if for example, a fire occurs later.
It is very important to conduct the proper research in advance before renting your basement to a residential tenant. Being careful in advance can save you unnecessary lost rent, repairs and legal costs.
Besides advertising in a local newspaper or at a nearby university for students, consider joining the following websites, which are visited by hundreds of thousands of potential tenants: viewit.ca, kiijii.com or gottarent.com.
You must also be very careful when interviewing any potential tenant that you do not inadvertently violate any sections of the Human Rights Code by asking any inappropriate questions.
You are permitted to ask a tenant on a rental application if they smoke, whether they have pets and how many people will be living with them in the apartment. You can also ask for references and their rental history. You cannot ask about their ethnic background, religious or sexual preference or marital status.
Be very diligent to check the tenant’s credit, employment references, and prior landlords.
You can join a website such as tenantverification.com or rentcheck.ca where for fees as low as $50, you can conduct a credit check on a potential tenant.
Check phone numbers of all references in the phone book to make sure they are who the tenant says they are.
Ask for a current pay stub from where they work.
By not doing careful research in advance, you will find out later that trying to evict a tenant who is damaging the premises or interfering with the enjoyment of the other tenants can typically take two months, and that’s when there are no significant delays. Unfortunately, professional tenants who know how to work the legal system can delay proceedings by up to six months. Such tenants can cause severe financial hardship for landlords.
There are also of course responsible tenants who take excellent care of their, in many cases better than even an owner would. By making sure that you find these tenants in advance, you will not have to worry about the difficulties or the costs that will be incurred if you later need to evict them.
Basement apartments, if created and rented out properly, can give you peace of mind and additional income to assist you in both carrying the costs of your home and increasing its long term value.
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Contact the Jeffrey Team for more information - 416-388-1960
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