What real estate agents need to know about Section 9.8 of the amendment
In addition to granny, a granny flat can hold some terrible pitfalls for a new owner and anyone involved in the sale of said unit. It’s one more thing real estate professionals should be concerned about, because the consequences of an apartment being declared illegal or foreclosed on can be disastrous for the buyer, who may seek compensation from real estate agents, home inspectors, or anyone else who hasn’t issued all appropriate warnings.
Any detached unit with its own cooking, eating, sleeping, and sanitary facilities in a single-family or semi-detached house or semi-detached house is classified as an “accessory dwelling unit.” It doesn’t matter if it’s a basement apartment for rent or a unit to house a family member or a nanny.
For the past two decades, Ontario has been a rollercoaster ride for homeowners and the real estate community. In 1994, the New Democracy government changed the law so that municipalities could no longer ban basement apartments. In May 2001 the Conservative government reversed the rules and most towns use zoning controls to block new unauthorized accessory housing.
Strict fire regulations are in place, and any existing apartment that was occupied in November 1995 is allowed, provided it meets the requirements of the Ontario Fire Code Section 9.8 amendment.
There’s also a new registration system, so officials can monitor compliance, and some penalties in place that are severe enough to be taken seriously (fines of $25,000 or more, or even a year in jail!)
Before closing deals involving basement apartments or duplexes, triplexes, or any other multiple dwellings, real estate agents must ensure that buyers have obtained written confirmation of whether or not the apartments are registered, and have been inspected and it was determined that comply with the Fire Code.
Real estate agents may face angry and disappointed buyers because, under the new rules, an illegal or substandard apartment is easy to spot and close, and can be expensive for the new owner to renovate and keep running.
To get a granny floor certified in Ontario, inspections by the local Fire Department and Electrical Safety Authority and possibly another by a local Ontario Building Code Officer are required. In most cases, at least some renovations or repairs are required. Even if no renovations are needed to meet fire code, the fees alone can be in the hundreds of dollars.
Some areas of Ontario Fire Code Modernization 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 may be combustible and not meet current requirements. These items may need to be removed or covered, and homeowners are sometimes required to install a sprinkler system.
A professional home inspection cannot certify a freestanding apartment, but a skilled inspector can identify the extent of renovations needed to comply with new regulations. It can also be used to alert the prospective buyer that the unit carries additional responsibility and liability.
As for the steps a real estate agent should take if the home includes a granny flat, notifying the prospective buyer that they may be subject to regulation is definitely at the top of the list. In Ontario that would seem absolutely necessary to avoid a non-disclosure charge. In other jurisdictions, it might be prudent to do so, but it is better to err on the side of providing more information than less.
Fines and other legal consequences for not complying with the law are just the most obvious problems facing an owner of a unit that is not certified. Having to kick out the tenant is also obvious. But keep in mind that insurance coverage or insurance claims may be denied, mortgages may be denied or voided, and a renter who is injured may have grounds for a civil lawsuit.
Not all jurisdictions are as tough as Ontario…yet. But a real estate agent can fulfill his or her professional obligations and avoid becoming entangled in a lawsuit just by issuing a warning. And it’s worth doing, whether your customer is the seller or the buyer.
A detached apartment can add real value to a home, especially if the buyer wants to have a family member close but not too close, or if the buyer needs rental income to offset mortgage payments. In fact, it is the reason why some people buy a property of this type.