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When is a basement apartment legal? A helpful checklist.

REALTORS® must know where the law stands on "basement apartments" – self-contained apartments homeowners add within their house—so they can best protect their buyer clients and clearly represent their vendor clients.

Throughout the 1990s the laws regulating "basement apartments" have flip-flopped. In 1994, "basement apartments" were deemed legal as long as they met building, fire and planning standards. In 1995, when the Progressive Conservatives replaced the NDP in Ontario, they effectively returned to municipalities the right to decide through their zoning bylaws where new apartments can be added to houses. Therefore, the rules may differ among municipalities.

Adding to the mix, the PCs permitted two-unit houses to be grandfathered if the units were "used or occupied" on or before November 16, 1995 (the latest legislation), complied with the new Fire Code requirements by July 14, 1996, and met applicable municipal planning standards. Grandfathering was also applied to houses issued a building permit on or before May 22, 1996 to construct or alter a second unit.

In general, apartments built after July 14, 1996 must comply with the Building Code and apartments existing on or before that date must comply with the Fire Code. Both must comply with certain property and municipal zoning standards.

A Check List for Determining if a Basement Apartment is Legal

  • Obtain facts as to significant dates discussed above.
  • Obtain fire department certificate.
  • Obtain hydro certificate.
  • Before signing an Agreement of Purchase and Sale, REALTORS® should secure evidence that the second unit is legally permitted and should ensure the unit is inspected. Fire and hydro clearance certificates should be delivered by the vendor on closing. With buyer agency now in effect there is an even stronger obligation for REALTORS® to protect their clients’ interests.
  • If the second unit has not been inspected, the offer to purchase should be made conditional on an inspection and the buyer should find out from the home inspector if any upgrades are required and how much they will cost. This amount should be factored into the sale price of the house. If extensive retrofits are required it is advisable to have the tradesperson meet with the municipal inspector.
  • Listing reps should also be sure to make reasonable efforts to discover if the second unit meets the legal requirements.
  • If a unit does not prove to be legal, the buyer will not be able to get financing and the deal will not close.

For more information check the government’s website at www.mmah.gov.on.ca.

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Toronto Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.