What to keep in mind when creating a second suite

Reporter/Byline: Mark Weisleder for the Toronto Star

Income from a basement apartment can help first-time buyers carry the costs of their home. But it’s not as simple as placing an online ad; homeowners must take due diligence to ensure their basement apartment is legal and that their tenants are trustworthy.

The legalities of basement apartments

If the apartment doesn’t comply with local zoning bylaws and fire codes, the apartment isn’t legal.

You need to check with the city municipal standards department or the fire department to see if your basement apartment is registered as a second unit. If it is, then it is legal and compliant with the fire code. If it’s not registered, then you have to conduct further research.

A city’s zoning bylaw will tell you if your area permits a basement apartment. In Ontario, if the basement apartment in your home has been rented since October 31, 1995, then it is legal even if the current zoning bylaw does not permit it.

In Toronto, for example, a “second suites” bylaw passed in 2000 permits second suites in all single-detached and semi-detached houses throughout the city with certain conditions. If you do not meet these conditions, you must apply to the city for permission to create your new basement apartment unit.

If you want to apply for a new unit, you will need a building permit that satisfies the provisions of the fire code in your province.

When looking at a property, if the basement apartment is being advertised as a “nanny suite” or “in-law apartment,” be wary — this unit is most likely illegal. If a neighbour complains about your unit to the city and an inspection occurs, you will be required to pay to upgrade your unit to proper standards.

You must advise your insurance company if you intend to rent out your basement apartment. By not disclosing this information, it may refuse to pay a claim if, for example, a fire occurs later.

Finding a good tenant

Besides advertising in a local newspaper, consider posting a listing on Viewit.ca, Kijii.com or Craigslist.ca.

You must be very careful when interviewing any potential tenant that you do not inadvertently violate any sections of the Human Rights Code by asking any inappropriate questions.

You are permitted to ask prospective tenants on a rental application if they smoke, whether they have pets and how many people will be living with them in the apartment. You can also ask for references and their rental history. You cannot ask about their ethnic background, religious or sexual preference, or marital status.

It’s important to conduct the proper research in advance before renting your basement to a residential tenant. You can use websites such as tenantverification.com or rentcheck.ca where for fees as low as $21 to conduct a credit check on a potential tenant. Be sure to ask for a current pay stub from where they work and call previous landlords for references.

Basement apartments, if created and rented out properly, can give you peace of mind and additional income to assist you in carrying the costs of your home and increasing its long-term value.

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