Law Times

PAGE 12 Selling homes with basement suites a legal landmine But real estate agents marketing income properties despite restrictions FOCUS BY KENNETH JACKSON For Law Times S elling homes with basement apartments is an area filled with landmines given the plethora of illegal income prop- erties in cities across Ontario, according to Toronto real estate lawyer Bob Aaron. Even though they're illegal, it doesn't seem to stop people Reach one of the legal and business markets in largest from buying them, says Aaron. "Everybody seems to go, 'Wink, wink, we know it' buy it anyway because we can get a lot of money every month and it will help pay the mortgage. s illegal but we'll '" Agents are just as guilty of this as the buyers and sellers, says Aaron. They get around the issue by putting "seller does not war- rant retrofit status" in the purchase agreement. That basically means they're selling an illegal apartment but they're not responsible for it. "It' Canada! ment," says Aaron. The buyers take all the risk of s code for an illegal apart- getting caught by city inspectors. They could force them to kick out the tenants. The sellers and agents differently. He says a retrofit only refers suites depends on where they live in the city. There are pockets in the city where it' more restrictive, says Coun. Jim Neill. It comes down to whether the city' sewers, can handle the addition- al units. Neill says that as some neighbourhoods don't have extra capacity, the city doesn't allow sec- ondary suites there. That doesn't stop people, s infrastructure, such as believe putting in the clause will protect them. Aaron, however, sees things With more than 250,000 page views a month, canadianlawlist.com captures your market The all-new canadianlawlist.com features: — A fresh new look, designed for improved user experience — Effective new ways to reach the legal market — Gold and silver advertising packages For more information contact: Colleen Austin at 416-649-9327 or toll free at 1-800-387-5351 colleen.austin@thomsonreuters.com to the Fire Code. "It doesn't refer to zoning or building codes or parking or any of the factors that impact the legality of basement apartments. I have yet to see a real estate agent put in the agreement of the purchase and sale the base- ment apartment is illegal. They try to fudge it." Aaron says buyers could potentially turn around and sue the selling agent and sellers if city inspectors shut their apart- ment down. Toronto Real Estate Board apartments in Toronto Area involve several areas of consideration: bylaw permissibility; compliance with the building, fire, and electrical safety codes; and registration. "In short, if a listing indicates said legal basement the Greater CLL Online ad - 1/4 pg LT.indd 1 2/15/12 1:38 PM GAIN INSIGHT INTO THE LEGAL DYNAMICS OF A REAL ESTATE TRANSACTION LECTURES IN REAL ESTATE TRANSACTIONS PAUL PERELL, B.A. (TORONTO), LL.B., LL.M., Ph.D. (OSGOODE), L.S.M. Gain insight into the mechanics and legal dynamics of a real estate transaction. Lectures in Real Estate Transactions is a valuable resource that covers the fundamentals of a real estate transaction from beginning to end, including mortgages and remedies. Written by an experienced judge and professor, this title presents information in an easy-to-understand style and includes references to leading case law. Lectures in Real Estate Transactions is an indispensable resource. It is a study in the fundamental principles of contract law, tort law, restitution, and property law in the context of a transaction involving the sale of land and in the broader context of commercial transactions. ORDER # 804548 $144 Hardcover approx. 360 pages October 2011 978-0-88804-548-5 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. s OK while others are June 11, 2012 • Law Times however. "What happens is they create basement, it's a cellar. There's all s not a illegal secondary suites," says Neill. "To be a legal basement apart- ment, you need to be 60 per cent above grade. Otherwise, it' kinds of illegal cellar apartments. They are illegal under the Ontario Building Code and they're illegal under our bylaws." Agents in Kingston regu- president Richard Silver recently issued a letter warning agents of this long-standing practice. Silver larly advertise houses with ille- gal basement apartments as homes with a potential income property, often by renting them to post-secondary students. Homeowners can fetch up to $600 per room simply by throw- ing up a bit of drywall and a small bathroom with a kitchen. They often don't meet any code. But Neill says it' istic for the city to check every single home for an illegal apart- ment and that complaints drive the system. The debate on secondary suites s just not real- that a property has a retrofit base- ment apartment, it must meet municipal bylaw requirements, have a certificate of compliance to verify that it has passed fire and electrical inspections, and be registered with municipal property standards," said Silver. " structed, it must meet Building Code requirements." According to Silver, finding out whether a municipality's bylaws permit basement apartments and whether any special condi- tions apply are the first steps in the process. Failure to comply could result in fines and other penalties. "I think Richard Silver, who I Additionally, if it is newly con- heated up a couple of years ago in Kingston when a homeowner had to evict her tenants. A neighbo ur complained the homeowner was renting portions of her house. Municipalities have had the authority to enforce their bylaws with respect to basement apart- ments since 1995, said Silver. Units that existed prior to November 1995 are exempt from meeting local bylaw requirements. "Once bylaw and code requirements have been met and certified, homeowners can register the basement apartment with municipal property stan- dards," said Silver. "Bear in mind that if your clients are planning to construct a basement apart- ment, they must also apply for a building permit and comply with today' applaud for his initiative, is say- ing to real estate agents, 'You've got to be more upfront of the legalities of basement apart- ments and it' cient to just say there's no retrofit compliance," says Aaron. AVAILABLE RISK-FREE FOR 30 DAYS Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Order online at www.carswell.com s no longer suffi- In Kingston, Ont., whether homeowners can have secondary inspector must look at the unit. But Aaron says he doesn't fore- In addition, a Fire Code s Building Code." see a change to the way agents deal with illegal apartments any time soon. "Many of these people are my friends and clients, but there' 'No rush' on closure Continued from page 8 refurbish the institution and keep it open. "It gives lots of flexibility on what they can do, CANADA LAW BOOK® www.lawtimesnews.com ending up closed is the most probable outcome, it is not a foregone conclusion." "There is no rush on the government. So while I think [the prison] LT " he says. hesitation to change the old ways," he says. s just a reluctance and a LT Online Print and in

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