How do I know if a basement apartment is legal?
Ask for the building permit and its final inspection, not the tenant's rent receipts. Which rules the unit has to meet depends on when it was created, so the permit file is the only thing that settles it.
The Planning Act requires municipalities to allow additional residential units, so permission is generally not the obstacle. Compliance is, and compliance is documented.
What to ask for: the building permit and its final inspection, the electrical certificate of inspection from the Electrical Safety Authority, and confirmation from the municipality that the unit complies with the zoning by-law for that property. The municipality can also tell you whether an order or open permit is outstanding.
The part that gets misstated. A unit built today is built to the current Building Code. An older unit is not retroactively required to meet today's Code; an existing two unit house is generally assessed against the Fire Code retrofit provisions instead, which set requirements for fire separations, alarms and means of escape that are not identical to the Building Code's. So a unit can be lawful without meeting the ceiling height or window sizes a new one would need. Which regime applies to a particular basement is a question for the municipal building department, with the permit file in front of them.
Why it matters in money. A lender will only count rental income from a unit it accepts as legal, so an undocumented unit may not help you qualify. An insurer may decline a claim arising from an unpermitted unit. And an order to remediate lands on you as the owner, with a tenant in place who keeps their rights under the Residential Tenancies Act regardless of whether the unit was permitted.
No permit and no municipal confirmation means you are buying a room in a basement, and you should price it that way.
What it depends on
- when the unit was created, which decides whether the Building Code or the Fire Code retrofit provisions apply
- the municipal zoning by-law for that property
- whether a permit was closed with a final inspection
Next questions
What are the red flags in an older Toronto house?
Knob-and-tube wiring, a sixty amp service, galvanized supply pipes, a clay drain line under mature trees, an underdug basement without proper underpinning, vermiculite insulation, and any unpermitted basement apartment.
City of Toronto
Is a rental property a good investment in the GTA?
At current GTA prices most units do not cover their costs from rent, so the case rests on appreciation, which is a bet rather than a yield. Run it with real numbers including vacancy, maintenance and tax on the rent.
Ontario