Looking to buy a home with a rental unit? Check that it is legal

What do I need to know about buying a home with a rental unit?

With real estate prices at an all-time high in Ontario, rental properties are in demand. Real estate agents are seeing increased interest in homes that contain income-generating secondary apartment units for rent.

Buying a home with a rental unit can be an attractive approach to help offset your mortgage costs and increase your return on investment.

If you are looking to purchase a property with a rental unit, I suggest that you plan carefully and familiarize yourself with the relevant local statutes, codes, laws, risks, obligations, and requirements. You must first ensure that the unit is permitted and meets all legal codes and requirements. Then you will need to understand your rights and obligations as an owner.

A good place to start learning about the role of a landlord is the Landlord Tenant Board website, where you can read about a landlord’s rights and obligations under the Residential Leases Act of 2006.. I also suggest that you discuss this with a real estate agent and an attorney.

Ask your attorney to verify if the property is zoned to allow for a multi-unit dwelling and to confirm that it meets the requirements of the electrical, fire and building safety code. This is important as you can be held liable if safety codes are not followed and there is a fire, flood, or structural collapse resulting in destruction of the tenant’s property, causing injury, or worse.

Ask your agent to ask the seller’s real estate representative for all pertinent documentation, including copies of municipal permits, inspections, receipts, and approvals that the seller should have received when the apartment was created or upgraded to meet the standards. codes. If the seller is unable to provide them (perhaps because the unit predates your ownership), you, along with your real estate agent and attorney, should do some research to confirm that the unit complies with provincial laws and codes, and municipal.

If the municipality were to conduct an inspection and discover that a unit does not comply with provincial legislation and municipal zoning statutes, it could be fined and ordered to comply with it or to demolish it entirely.

This is why I highly recommend not offering a rental unit without first ensuring that you can legally do so. Remember, even if a property has a rental unit with a tenant when you view or buy it, that doesn’t mean it meets all the necessary requirements.

So if you find a home with a rental unit that you like, but can’t confirm its legality, talk to your agent about the steps you need to take to get it compliant with zoning and code requirements. You can work with the local municipality and electrical, plumbing, and construction professionals to determine the full scope of work and costs before purchasing the property.

All the best!

Joe Richer is a Registrar with the Real Estate Council of Ontario (RECO). This column is for general information purposes only and is not intended to be legal or professional advice on real estate transactions. Follow RECO on Twitter: @RECOhelps


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