BARRISTON BRIEFS: Purchasing a Property with an Income Suite
In the new series, Barriston Briefs, Janice Mumberson talks about Purchasing a Property with an Income Suite.
Have you thought about purchasing a home or an income property with two separate residential units? The City of Barrie has one of the lowest vacancy rates in Canada, and potential homebuyers often view multi-unit residential properties as an opportunity to create additional income.
As a buyer entering into an agreement to purchase a multi-unit residential property, you should ensure that the use of the property is clearly identified as a multi-unit residential property and not a “single family dwelling”. You should also consider including conditions to address factors often specific to multi-unit dwellings.
If the property has existing tenants, obtain written confirmation from any tenants that the lease is in good standing, and get copies of all such lease agreements. If your intention is to renovate the property, or move into it yourself, consider the benefits of making it the seller’s obligation to provide you with vacant possession of the property on closing.
A satisfactory inspection of the property pursuant to the Ontario Fire Code should be performed and the related certificate obtained (likely at your cost). Without verifying that the multi-unit property meets the legislative requirements regarding fire safety, you could become exposed to the costs of retro-fitting or renovating the property to bring it into compliance.
It is important to obtain a warranty from the seller that the property complies with all building and zoning requirements, and that it is registered as a multi-unit dwelling with the City of Barrie. A building compliance, zoning, and work order search performed before closing will confirm whether the property is appropriately zoned for a second unit. This same search will reveal if there are any outstanding building permits that have not been closed by an appropriate inspection. If there are outstanding work orders or open permits, these should be addressed before closing. Confirmation from the City of Barrie that it is aware that a second unit actually exists at the property can also be obtained.
Throughout the process of purchasing a multi-unit property, make sure to advise your realtor, lawyer and mortgage lender of your intentions to use the property as a multi-dwelling unit. This will help ensure there are no last-minute concerns. Your realtor and lawyer will assist you in protecting your interests throughout the process!