What Realtors need to know about Retrofit Section 9.
In addition to granny, a granny flat can contain some dire pitfalls for a new owner and anyone involved in the sale of such a unit. It’s one more thing for real estate professionals to be concerned about, because the consequences of having an apartment declared illegal or closed down can be disastrous to the purchaser, who may seek compensation from Realtors, home inspectors or anyone who didn’t issue all the appropriate warnings.
Any separate unit with its own cooking, eating, sleeping, and sanitary facilities in a detached or semi-detached house or a rowhouse is classified as an "accessory dwelling unit." It doesn’t matter whether it’s a basement apartment for rent or a unit to accommodate a family member or a nanny.
Over the past two decades in Ontario it’s been a roller-coaster ride for home owners and the real estate community. In 1994 the New Democratic government changed the law so that municipalities could no longer ban basement apartments. In May of 2001 the Conservative government reversed the rules and most cities use zoning controls to block unpermitted new accessory dwellings.
Strict fire regulations are in effect, and any existing apartments that were occupied in November of 1995 are permitted – as long as they meet the requirements of the Retrofit to Section 9.8 of the Ontario Fire Code.
There’s also a new registry system, so officials can monitor compliance - and some penalties in place which are stiff enough to take seriously (fines of $25,000 or more, or even a year in the slammer!)
Before closing deals involving basement apartments or duplex, triplex or any other multiple dwellings, Realtors should ensure that purchasers have obtained written confirmation of whether or not apartments are registered, and have been inspected and found to conform to the Fire Code.
Realtors can be faced with angry, disappointed purchasers because under the new rules an illegal or non-conforming apartment is easy to detect and easy to shut down – and may be costly for the new owner to renovate, to keep it operating.
To get a granny flat certified in Ontario requires inspections by the local Fire Department and by the Electrical Safety Authority and possibly another by a local Ontario Building Code Official. In most cases, at least some renovations or repairs are required. Even if no renovations are needed to meet the fire code, fees alone can be a few hundred dollars.
Some areas of the Ontario Fire Code Retrofit Section 9.8 can be difficult to address, especially if the apartment was added as an afterthought in a typical home. For example, ceiling tiles and wood paneling in a basement apartment may be combustible and not meet with current requirements. These items may have to be removed or covered and owners are sometimes ordered to install a sprinkler system.
A professional home inspection cannot certify a self-contained apartment, but a knowledgeable inspector can identify the magnitude of renovations necessary to meet the new regulations. He can also be used to alert the prospective purchaser that the unit entails additional responsibility and additional liability.
As for what steps a Realtor should take if the home includes a granny flat, notifying the prospective purchaser that it may be subject to regulation is definitely at the top of the list. In Ontario that would seem absolutely necessary to avoid a charge of non-disclosure. In other jurisdictions it might just be prudent to do so, but better to err on the side of providing more information than less.
Fines and other legal consequences of not meeting the law are just the most obvious problems facing an owner of a unit that is not certified. Having to toss the tenant out is also obvious. But consider that insurance coverage or insurance claims may be denied, mortgages may be denied or nullified, and a tenant that is injured may have grounds for a civil suit.
Not all jurisdictions are as tough as Ontario... yet. But a Realtor can meet his or her professional obligations and avoid getting tangled up in a lawsuit just by issuing a caution. And it’s worth doing so, whether your client is the vendor or the purchaser.
A self-contained apartment can add real value to a home, especially if the purchaser wants to have a family member near, but not too near, or if the purchaser requires rental income to offset mortgage payments. Indeed, it’s the very reason some people buy such a property.
Visit: www.electrospec.ca
Comments(0)