Unauthorized Suites

2007/07/04 Originally published in the Vernon Morning Star.

In my last column I pointed out that homes with suites are a kind of real estate that are in popular demand. There are however, some points all such investors/homeowners need to know.

If you are buying a home with an unauthorized/illegal suite you must accept that your suite income is not completely reliable. Presently, the City of Vernon is showing a tolerance of sorts, of illegal suites. They tend to enforce their bylaw which prohibits suites, only when they receive a complaint from other homeowner(s) in the neighbourhood. They seldom, if ever act otherwise.

When Realtors write up a purchase contract on a home with an illegal suite, they most often insert this clause: "The buyer is aware that this property contains unauthorized accommodation and has been informed of the consequences of such ownership and the potential loss of income should the rental use be discontinued."

Frequently, people who buy homes with such suites do so in order to be able to afford the home. Lending institutions and CMHC (Central Mortgage and Housing) do not however allow buyers to use all the suite income in their qualification profile when applying for their mortgage. Presently CMHC will only use eighty percent of the income the suite produces. The reason for that is they know enforcement of a bylaw against suites could see that income cut off.

If you have a home with an unlawful suite, be courteous and mindful of your neighbours. Creating off-street parking is important as it allows for safe passage by emergency vehicles. It also keeps the neighbourhood looking more attractive.

It appears that the City of Vernon is considering legalizing some suites. It's my understanding they are doing this in an effort to help provide affordable rental opportunities. They are talking about making homes with suites adhere to the building codes and discussing charging DCC's to the tune of roughly $15,000. per suite. As an investor or a home buyer who needs the suite income, you need to be aware these expenses for legalizing are in a discussion phase.

The City is also considering a plan, that only homes with owners also living at the premises will be considered for legalizing the suite. My guess is that they realize there will be fewer complaints and problems if it is the homeowner's principal residence. That may well be true.

Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email or call 503-3755.

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Investment and Retirement

Unauthorized Suites