I recently acted for a client purchasing a triplex. At least they thought they were buying a triplex. The listing described the property’s current use as “a non-conforming triplex.” I ordered a Report on Compliance from the City of Ottawa which revealed that the property’s current use could not be verified. The report noted:
“A three-unit dwelling is a listed permitted use in the R4F zone of By-law 2008-250 however there are no building permit records establishing a three-unit dwelling use at this location. Our building permit records indicate a duplex dwelling with roomers at this location.”
Is this a significant issue? Yes. It appears as though at some point in the 80’s one of the previous owners converted this old garage into a bedroom for rent. Essentially what the purchasers were buying is a duplex with an illegal unit. This becomes an issue because the lender – in this case CIBC – had completed their appraisal based on the property being a triplex. The appraisal was based on other triplexes which increased it’s appraised value. If only two of the units are legal the property is technically a duplex and this would affect the market value of the investment.
The other issue is that the City of Ottawa could intervene at some point (ie. a tree falls on the garage) and require the owners to bring the garage up to code. In that case you have to get a new survey, hire an architect, get plans drawn, get a new building permits – tens of thousands of dollars. While it is unlikely that the city would intervene, this is a risk that the purchasers didn’t bargain for when they negotiated an agreement of purchase and sale.
If you would like further information about this article’s subject please contact Delaney’s Law Firm at (613) 233-7000.