Renting a bachelor unit without an address: beware

A landlord’s bad experience

A landlord from Montreal encountered numerous unpleasant surprises after purchasing an income property advertised as a four-unit building, including three regular apartments and one bachelor unit. It was a beautiful building constructed around the 1930s and considered a heritage property by the city.

The new owner planned to live in one of the four units for a few years before buying a house and renting out all four units. All units in the building had their own address, except for the basement unit, the bachelor.

At the time of purchase, the bachelor was occupied. Since it had no official address, the tenants could not receive mail directly. They had an arrangement with the tenants on the ground floor, who would collect their mail in a mailbox located next to their door. Since the unit had no civic address, there were no other options with Canada Post.

The complications

Everything was going smoothly for both the tenants and the new owner-occupant. Problems began when a new tenant moved into the bachelor and insisted on receiving her mail directly at her unit.

The landlord took this request seriously and quickly began the process of obtaining a proper address for the basement unit. Until then, she had not felt the urgency, as it had not been an issue.

At the time of purchase, the real estate agent, insurance agent, and appraiser had all assured her that the units were compliant. They indicated that even without a civic address, the bachelor was “tolerated” by the city.

The landlord was shocked when the city refused her request to register an address for the basement unit. She was even more surprised to learn that the bachelor was not only non-compliant but also illegal to rent.

The consequences

The situation quickly worsened for both the landlord and the tenant. The unit did not meet acceptable standards for a basement apartment, with the most significant issue being non-compliant ceiling height.

Given the scale of the required renovations, the landlord would have had to invest a substantial amount of money to bring the unit up to current standards. The tenant had to vacate the premises as quickly as possible, since the landlord was no longer allowed to rent the unit without making the necessary changes.

Although the landlord purchased what was presented as a four-unit property, she can now only rent three units, resulting in a significant financial loss. Since the purchase, she has been paying insurance premiums based on four units, which led her to believe all units were habitable and rentable, as none of the professionals involved had raised any concerns.

The landlord no longer lives in the building. She rents out the three upper units, while the basement remains vacant. She considers this a very negative experience and hopes her story will serve as a warning to future buyers.

Advice for future buyers

Today’s buyers are more aware of the risks associated with this type of property, but certain precautions remain essential during the purchasing process.

For example, during a pre-purchase inspection, it is important to remember that the inspector focuses on specific elements but does not conduct an in-depth evaluation of each individual unit. The inspection typically covers plumbing, electrical systems, roofing, foundations, tanks, and the property as a whole.

There is generally no specific assessment of unit compliance. It is therefore the buyer’s responsibility to request a more thorough evaluation, even if it involves additional costs. This is a worthwhile investment for ensuring a secure purchase. Buyers can also consult the municipal property assessment roll to confirm that all units are properly registered.

It is also important to consider municipal regulations if a landlord plans to modify or add a unit. The owner should prepare a plan, consult the city, and ensure everything is compliant and approved.

While this may result in slightly higher taxes, it helps avoid legal issues related to non-compliant rental units. The city’s permits and inspections department is available to answer questions and guide property owners in their renovation plans.

The absence of a civic address should be a red flag for prospective buyers. To avoid such situations, it is their responsibility to take all necessary precautions to ensure that all units in the property they intend to purchase are compliant, especially bachelor units.