Buying a home with a Basement Apartment:

From the 1950s, some municipalities (led by Toronto) started allowing home-owners to construct second suites in their semi-detached and detached homes.

These second suites are subject to bylaws and building codes but the standard is lower than rules regulating legal apartments.

A Legal apartment:

Must be it’s own completely contained box—separated from all other rental units using special fire-rated drywall, doors and floor assemblies that provide a 20 to 30 minute burn-time. A legal apartment must also have special fire-dampers (gates installed in duct-work to ensure that fire can’t travel from one unit to the next through duct work), as well as two points of unobstructed escape.

A Secondary Suite:

Does not need to be constructed using this special fire-rated material. But must be self-contained (a separate bathroom, kitchen and living space), must have a ceiling clearance of at least 6-feet-5-inches (differs depending municipal codes), and have at least two forms of unobstructed escape, one of which must be a door leading directly to the outside.

To be authorized, second suites must adhere to residential zoning requirements, property bylaws, occupancy standards, health & safety requirements as well as fire and electrical codes. Unlike legal apartments, only a 15-minute fire rating is required with secondary suites. Also, these suites cannot be bigger than the main living space—so, you can’t turn a 1,200-square-foot basement into an apartment if your main floor space is only 1,000 square feet.

Creating a new second suite

You’ll need to meet your city’s bylaws and regulations- In Toronto, for instance:

• The principal residence must be at least 5 years old
• The house must be detached or semi-detached
• You cannot significantly alter the exterior facade of the house
• The second suite must be smaller than the rest of the house and be self-contained with it’s own kitchen, bathroom and entrance
• The property must meet parking requirements (except in the former city of Toronto, where they recognize that limited parking is available)
• Bathrooms must have either a window or a fan
• There must be at least 4 cubic feet of kitchen cupboards per occupant

If you cannot adhere to all these rules, you can apply to the city’s Building Department Committee of Adjustments, but this will take time, money and will probably require you to do more work to bring the unit up to code. Keep in mind, though, that the consequences of renting out an improperly built unit can be devastating, and a penalty for fire code violations is a fine of up to $25,000 or a prison term of up to one year, or both.

Creating a legal apartment

If you opt to build a legal apartment you will need to adhere to all the previously mentioned regulations, but be prepared for a stricter set of standards. For instance, instead of simply requiring the landlord to ensure smoke alarms are installed and have good, working batteries, landlords of legal suites may be required to install interconnected smoke alarms as well as fire extinguishers.

Buying a house with a second suite

If you’re in the market for an income-generating property, you’ll quickly come across the term “retrofit,” often attached to the phrase: “Seller and agent do not warrant retrofit of basement apartment.” According to Bob Aaron, Toronto Star’s real estate lawyer columnist, this word really states is that the apartment does not meet fire code. Aaron suggests that when this word is used in a listing, a home buyer should “find out why the unit doesn’t comply and what would be necessary to legalize it.”

So where does that leave the would-be buyer? It means you need to be aware of the rewards and the risks that come with owning a home and renting out a secondary suite.

The Risks?

• Anyone can request an inspection of your secondary suite from the city planning department or the fire department.
• Getting caught with an illegal apartment could result in you having to transform the home back into a single family dwelling (ie: remove the tenant and the secondary unit) or pay to retrofit the apartment so it’s legal
• If a floor or fire prompts an accident or death you are liable and can be sued. (It’s one reason why Aaron suggests hiring professionals to make sure your unit meets electrical and fire safety standards, at the very least)
• If you don’t tell your insurance provider about your tenant, you could void your home insurance and risk losing a claim if a catastrophic accident or event occurs.

For a detailed explanation of what to expect and how to legally construct a secondary suite or legal apartment, read the Homeowners’ Guide to Secondary Suites.