I know a thing or two about real estate, right?
Fourteen years in the industry, hard-working lad, top agent in the brokerage, and memory like an elephant.
I’ve always maintained that knowledge is the key to this business. Sure, sales is part of it, as is actually finding people who want to work with you, but knowledge is, and always will be key.
So what if I told you that I have absolutely, positively, zero idea what makes a basement apartment legal in the City of Toronto?
It’s true. I’ll admit it.
A client of mine read Friday’s blog post, and on Saturday, said, “Great blog on Friday, that was really eye-opening! But what must you actually do to make a basement apartment ‘legal,’ as you say?”
This was one of those moments where you basically revert back to a child, and do what you saw the cartoons do on TV. Like when you’re embarrassed, and you put your hands in your pockets and kick imaginary pebbles.
So I did what any cat, fox, or bear would do, if it were animated in the 1980’s:
That pretty much sums it up.
If a sound accompanies my “shrug,” it would have been something like “Iaaaaaaaauuuuunoh.”
Well, crap.
What can I say, I don’t know everything.
I don’t know what must take place for a basement apartment to be legal, but I do know the following:
1) It costs a lot.
2) It takes a ton of time.
3) Many areas of government are involved.
4) It rarely goes well on the first attempt.
5) Very few people even bother trying.
This might be the only place in life where we can tell our kids, “It’s not worth even trying.”
Sorry for my cynicism, but if you don’t agree, after reading Friday’s blog, then you’re rich, have found the way to get 38 hours out of a 24-hour day, know people in government, and are the single-most patient man or woman on the earth.
So, since I don’t know what’s involved in making a basement apartment legal, I will provide you with my “go-to” for when a client asks me.
Back in 2012 when Richard Silver, now of Sotheby’s, then of Bosley, was the President of TREB, he sent out a letter to all agents which I immediately printed and kept on file. No, I didn’t think to “copy” and put into a PDF; I actually printed it, and put it in a file called, “Knowledge,” which, no word of a lie, I had. It was full of articles from lawyers, inspectors et a. Things like, “What’s the difference between a Condo and a Co-Op?” And yes, Google had been invented back in 2012, but I remained old-school.
Luckily that is all in the past, right?
So here’s the letter from Mr. Silver in its entirety:
LETTER TO TREB MEMBERS FROM PRESIDENT RICHARD SILVER
March 2, 2012 — As Greater Toronto REALTORS we recognize that in comparison to other world cities, ours is a clean, safe and affordable place to live, and its allure means that we’ll continue to see greater intensification in the years ahead.
Toronto’s popularity is reflected for example, in the condominium market, which currently has more buildings under construction than in any other city in North America. Basement apartments also play an important role in meeting demand for housing throughout the Greater Toronto Area and if you have ever listed a property with one, you’re probably familiar with the “Seller does not warrant retrofit” clause. Second suites can cause confusion for homebuyers and REALTORS alike, but this doesn’t have to be the case.
According to noted home inspectors Carson Dunlop, achieving a “legal” basement apartment involves five areas of consideration: bylaw permissibility; compliance with the building, fire, and electrical safety codes; and registration.
In short, if a listing indicates that a property has a retrofit basement 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. Additionally, if it is newly constructed, it must meet Building Code requirements.
Identifying whether a municipality’s bylaws permit basement apartments and if any special conditions apply is the first step in the process.
Since 1995, municipalities have had the authority to enforce their bylaws with respect to basement apartments; however, units that existed prior to November 1995 are exempt from meeting local bylaw requirements.
The Building and Fire Codes are related in that the Fire Code is a subset of the Building Code. There is, however, an important distinction between them. The Building Code, which prescribes minimum requirements for the construction of buildings, for the most part applies only to the day the house was built, not retroactively. The Fire Code, which prescribes construction and safety issues related to how a building is required to perform should it catch fire, does apply retroactively.
In 1994, the provincial government set new Fire Code rules with which all basement apartments, new and existing, must comply. A unit upgraded to comply with the Fire Code is called a “basement retrofit”. The fire department must inspect all basement apartments, and when any deficiencies have been corrected, as is required, it will issue a certificate to verify compliance.
The Fire Code involves four key areas of compliance: fire containment, means of egress, fire detection and alarms, and electrical safety.
Fire containment refers to a building’s ability to contain a fire in the unit where it started. Walls, floors, ceilings and doors are rated based on how long they will survive a direct fire before burning through.
The typical requirement is a rating that affords a 30-minute separation between the units. Drywall and plaster ceilings for example, are acceptable but they must be continuous so that joists are not exposed in any room. By contrast, suspended ceilings are not acceptable.
Means of egress refers to the occupants’ ability to exit the house. Ideally, units should have their own exits. Units that share a common exit are allowed if the common exit is ‘fire separated’ from both of the units with a 30-minute rating. If it not rated as such, it can still be used provided that there is a second exit from each unit and the fire alarms are interconnected.
To be considered an acceptable second exit, a window must have an opening of at least 600 square inches, with the smallest dimension being 18 inches; the windowsill must be within three feet of grade; and basement window wells must extend three feet out from the house wall, to allow room to crawl out.
The fire detection area of compliance requires that all units have smoke alarms. Smoke alarms do not have to be interconnected unless the fire separation to the common exit area does not have a 30-minute rating. Some municipalities may also require carbon monoxide detectors.
Electrical safety refers to the required inspection by the Electrical Safety Authority.
As with the fire department’s inspection, deficiencies that the Electrical Safety Authority identifies must be addressed. In general, an apartment’s minimum ceiling height must be 6 feet 5 inches; its entrance door must be at least 32 inches by 78 inches; bathrooms require either a window or an exhaust fan; and if there is a parking spot for one of the units, there must also be a parking spot for the other unit.
Once bylaw and code requirements have been met and certified, homeowners can register the basement apartment with Municipal Property Standards.
Bear in mind that if your clients are planning to construct a basement apartment they must also apply for a building permit and comply with today’s Building Code.
Representing a house as a two family property requires that you verify it is registered with Municipal Property Standards. Failure to comply can result in a $25,000 fine and one-year jail term.
For more information on basement apartments contact your client’s municipality.
Yours truly,
Richard Silver, President
Toronto Real Estate Board
Ah, yes!
The “Certificate of Compliance!”
Also known in real estate circles, simply as “The Certificate.”
If you’re touring a 5-plex that’s up for sale, you’ll ask the listing agent, “Is there a certificate?” You needn’t say more. He or she knows what you’re after.
If there’s a 3-bedroom semi-detached with a beautiful 1-bed, 1-bath basement, bringing in $1,800 per month, you’ll undoubtedly want to know how much “the certificate” adds in value to the home.
And that’s the kicker here, folks. Buyers need to consider whether they even want the apartment to be legal.
I know, that sounds odd, but let me explain.
Let’s say that 3-bedroom semi-detached home that I alluded to above, with the $1,800 per month tenant (that covers about $350,000 in monthly mortgage costs, FYI), has a legal basement apartment. What would it cost, compared to the same property with an illegal basement apartment?
It has yet to really be mentioned in either Friday’s blog, or today’s, neither in the blogs or the comments, so let me spell it out here as I think it’s the perfect time to tell those who don’t already know: the City of Toronto is turning a blind eye to illegal basement apartments.
Why?
Because we have a housing crisis.
And if the city were to shut down 100,000 illegal basement apartments tomorrow, we’d all be worse off.
So then really, what do you surmise the difference between and illegal basement apartment, a legal basement apartment is in the city of Toronto?
If that semi-detached was up for $1,200,000 with an illegal apartment, and the exact same unit next door was worth $1,300,000, both with $1,800 coming out of the basement every month, would you choose to pay the extra hundred grand?
Many of you will simply look at the cost involved with turning that illegal basement apartment to a legal one, and that’s fair. But we don’t always know. Despite the figures provided in the Friday blog post (which was for a new unit), it’s always been like trying to hit a moving target.
You might find an illegal unit that could become legal by simply widening the bedroom window (digging out, installing a new sill, affixing a new window), adding a couple of smoke detectors and CO2 detectors, putting a fire extinguisher in the hall closet, and filling out the requisite paperwork.
Or, you could go to all that trouble, only to have the unit inspected, find out you have to spend massive amounts of money, and in the process, have put a target on your back by alerting the City of Toronto to your unit.
Are the illegal basement apartments in the city better left as our collective dirty little secrets?
So let me ask two questions for the readers:
1) For those of you that have illegal basement apartments: would you consider trying to go after “the certificate,” and if not, or if so, why?
2) For the rest of you, which of the four areas of compliance ( fire containment, means of egress, fire detection and alarms, and electrical safety) do you find the most cumbersome?
Fun times on an otherwise uneventful Monday…
The Mermaid
at 8:23 am
I’m really surprised that “if there is a parking spot for one of the units, there must also be a parking spot for the other unit.” How does that make any sense? At least the other obligations relate to safety – requiring two parking spots just seems to unnecessarily exclude so many houses from potentially having an income suite. Does anyone know why that condition exists?
JJJ
at 9:04 pm
I read that part and thought it was crazy. It would disqualify the vast majority of basement apartments, and houses that have been divided up into triplexes. No idea what it has to do with electrical safety. The only rational I can think up for this rule’s existence is that it harkens back to the 60s and 70s where the automobile was king, and buildings had to have a minimum number of parking spots to get construction permits.
SJ
at 9:34 am
The rule of parking is one for each unit minus one. A triplex would need two car parking, a house with a basement apt would need one car parking. It’s to ease up on the number of street parking permits required for a given neighbourhood. Some of long waiting lists for street parking.
SJ
at 9:35 am
*sorry … Some of Toronto’s neighbourhoods have long waiting lists for street parking.
Steve
at 2:06 pm
Indeed. Live on a street with narrow blocks and a few duplex/triplexes thrown in where each tenant has a car and you will very quickly work out why this rule is came into being. Like most of these rules it probably needs some more nuance to it, and of course as David notes nobody is following them anyway, but I can see where it came from.
Appraiser
at 8:55 am
This fits in to reader category 2) For the rest of you…fwiw.
Basement apartments. An age old issue for this 32-year veteran of the real estate business, the last 14 as an appraiser. I have personally inspected and appraised hundreds of homes with basement apartments. Less than 10% are registered / legal.
Yet, when we do a comparative analysis of other homes that have sold with basement apartments, there is no discernible price difference between properties that are legal and those that are not.
Apparently, the peace-of-mind of owning a legal unit does not matter much to Mr. Market. I believe this is at least one of the factors that keeps most units unregistered.
There are three ways to go here, either heavy enforcement of the rules, perhaps with a snitch line, plus monetary rewards for informants, potentially putting many out on the street; or a moratorium / major reduction in fees and other acquisition costs associated with secondary units to bring the vast majority into compliance; or do nothing.
Real estate millennial
at 10:55 am
If it’s not “legal” or legal non-conforming the lender won’t account for the rental income and it’s just considered finished space (the AMC’s state that on the scope or terms of reference). Overall, you’re right the market tends to be impartial. The larger worry is insurance issues which always seem to be overlooked until a problem arises.
Rachelle
at 9:44 am
I would add there are two different kinds of legality
1-Fire Safety legal and this is actually relatively simple, with 80% of suites being able to be relatively easily legalized by adding a fire resistant door and closer at the top of the stairs, drywalling the ceiling in the furnace room and making sure there is a working smoke/co detector on every floor outside the bedrooms. Pro-tip get the ones with 10 year sealed batteries.
2- Zoning/city requirements – many basement apartments are in place when you buy the house, so you would have to get a plan made and submit it to the city, which will probably cost more than all the work required above. Owners have to go through the process themselves, everyone I have ever spoken to, says they would never do it again.
Finally, the city of Toronto has started to try to get landlords to go through the process of zoning if they are reported by their tenant, I have been hearing stories for the last 2 years, prior to that, all you needed was a fire inspection.
Terry
at 11:40 am
Zoning should not be an issue. The apartment would be registered as legal, non-conforming.
Safety
at 9:46 am
I would not be comfortable unless I knew the apartment complied with fire standards. A few people died in the past year or two in the east end in illegal apartments because of fires. There needs to be a proper exit – i.e. proper windows if in the basement or separate exit that is not blocked and I would want to make sure it was safe.
Kyle
at 11:20 am
The certificate is a non-starter. For three reasons: Economics, Privacy and Principle.
Conforming comes with a lot of additional costs, that Renters aren’t going to pay any more in rent for, and buyers aren’t going to pay any more for when it comes time to sell your property. There are also privacy concerns, do we really want to register more personal info with the Government? And finally on principle, are all these additional rules and regulations warranted? I am all for safety, but people make all illegal apartments out to be death traps. This is patently untrue. To be clear if you were finishing a basement for your own personal family to enjoy, you wouldn’t need additional fire inspections, electcrical inspections and a certificate to make a space to create a rec room, so why is something that’s safe enough for your own family to use not nearly safe enough for a renter?
David Weenen
at 5:30 pm
It’s all about fire Kyle.
There is a. Minimum fire code standard, which is higher (and should be) for Legal basement apartments .
Homeowners don’t want to absorb the additional (and considerable) cost of doing it legally and that is why we have so many illegal basement apartments in Toronto.
A few more fires though and you will see things change.
The electrician isn’t allowed to rough in an apartment without the ESA knowing about it.
Soon. The builders will be held to the same standard and duty of care.
David Weenen
cory zirk
at 9:59 pm
my basement apartment has one egress. my windows have steel cages over them. If theres a fire in the furnace room, I may be fucked (its between me, and my only egress) my space is a death trap….
Chris
at 10:12 am
Looks like HQ2 won’t be coming to Toronto. I was incorrect in my guess of Atlanta, but correct in assuming that it would remain in the United States.
https://torontorealtyblog.com/blog/constitutes-legitimate-complaint-upon-closing/#comment-79684
Frances
at 9:42 pm
When we bought our house lo these many years ago, I would guess that about 80% of the houses in our neighbourhood had a basement apartment, probably none of which were legal. Certainly ours did. If the others were like ours, they were terrible places to live – cold, drafty, noisy and fire traps. We never rented ours and we eventually took out the kitchen. There were 10 nearby houses and 6 of them had basement apartments. One house was rebuilt and now has a legal, rented place, and there is one other, now much refurbished, that is still rented. And we are not downtown.
Greg Gill
at 7:31 am
How does the 6’5 basement height come into play? Is the only way to make a unit legal by underpinning then? That would be 60-80 grand just to do that. Very few houses in downtown are 6’5. Or can you meet all the conditions for fire without a 6’5 ceiling and the height is just some other condition?
cory zirk
at 9:55 pm
MUST HAVE min 6’5″ if its NEW house, that is then 6’7″
C. Severn
at 12:30 pm
The parking space issue is one I’ve dealt with. Basically, three tenants in three units, two have no driver’s license and no car. They are life long Toronto residents and have never driven (in Toronto a car is not necessary as public transit is very good).
So do you as a landlord have over greenspace to create two parking spots that will never be used?
It’s an odd requirement.
Terry
at 11:38 am
Suspended ceilings are permitted, however they must be fire rated. This is what we have in our LEGAL, fire inspected (with certificate) apartment. In addition, last year we added Roxul fire and sound proofing insulation.
cory zirk
at 9:57 pm
retroactively yes, its permitted. under OBC changes 2017, its no longer allowed, as a tenant may tamper with the tiles. they are now only permitted in commercial applications.
Jon
at 1:45 pm
So if these basement apartments are 90% not legal… What imitations are there for getting funding through the bank or from an accounting perspective? If the units are illegal, income declarations on rental income on your property should flag you as an owner of an illegal property no?
Let’s assume you claim the rental income Can you claim the expenses that are used towards this unit? Even if illegal? Or is the legality of the unit and the operation of a rental business separate?
Do the majority of illegal basement/second suite renters claim their income and the subsequent expenses? Ie. Portions of the mortgage interest? And if so, what amount?
Hansen
at 3:49 pm
Who can I contact to figure out if building a separate entrance to my basement from the side of my house would be possible/legal? Is there a specific department I can reach out to in the City? House is in Centennial Scarborough area.
Thanks in advance!
Sandie
at 10:07 am
In Scarborough it is illegal to rent out rooms except to family. Does this include basements. Who do I call to find out ? Thank you.
YASMIN PHAGOO
at 5:56 pm
I’m Guyanese background and it makes me so sick to see all these Indians renting out their basements, sharing a room with one other person for x amount of rent. How do you control this nonsense??? I’m looking for my brother and I was offered a room with no window, no fridge, no closet and the size to fit a twin bed alone, for $500.00 a month. Something needs to be done. I understand everyone has to live and some people cannot afford the rent by oneself. How can I find anything decent with decent landlords??
Sabrina Aven
at 4:33 am
In your listing search for basements you’ll have to add the word “legal” in it. Which will obviously be more expensive. But that’s just how living in Toronto is.
hüth
at 4:49 pm
Just another reason housing must be nationalized.