July, 2016

 

City  of  Mississauga  Abandons  Second  Unit  Licensing in  Favour  of  a  New  One Time  Registration  Process

 

 The City of Mississauga has recently made fundamental changes to the way that it regulates secondary dwelling units in the City.  It is imperative that all real estate professionals be aware of these changes and also the implications for their clients and customers.

 

WHAT IS A SECOND UNIT?

The City of Mississauga defines a SECOND UNIT is an accessory dwelling unit with its own kitchen, sanitary facilities and bedrooms/sleeping area(s) located within a Dwelling.

Second Units are also known as:

• Basement apartments
• Accessory apartments
• Nanny suites

A “DWELLING” is a detached house, or semi-detached house or a row home.  An apartment is NOT a “dwelling” within the meaning of the City’s by-laws and therefore cannot lawfully contain a Second Unit.

 

THE OLD LICENSING REGIME

• On January 2, 2014, the City of Mississauga passed its Second Unit licensing By-Law 204-13. It provided that an annual licence is was required for a Second Unit to be legal in the City of Mississauga.  In order to obtain that Licence, the homeowner had to pay an upfront fee and annual licence renewal fees.  If the home was lived in by the licence holder, the fee was $500 for the first year, and $250 for each renewal year. If the home is not lived in by the licence holder, (i.e. the home is an investment property), the fee was $1,000 for the first year, and $500 for each renewal year.
• This was in addition to other initial costs to obtain: a Zoning application (fee: $267.00); a Building Permit, if required (fee: $8.40/m² – minimum $225.00), an Electrical Safety certificate ($79+) and a Fire Department letter of compliance ($140+HST), not to mention the costs of construction and/or Committee of Adjustment applications to obtain minor variances ($1,000).
• Second Unit Licenses were personal to the homeowner and not transferrable.

 

Problems Identified

• Over the next two years, it became apparent that the onerous licensing requirements and the annual licence fee were discouraging homeowners who in fact had installed Second Units in their dwellings, from coming forward to legalize those Second Units. Even tenants were reluctant to report illegal Second Units for fear that this would lead to their eviction.  In a March 23, 2016 Corporate Report to Members of the City’s General Committee, the Commissioner of Transportation and Works disclosed that although approximately 400 Second Units had been previously grandfathered due to their construction date, and a further 3,500 properties had been identified through public complaints as possibly having a Second Unit, only 121 Second Unit Licenses had been issued by the City in the two years since the Second Unit Licensing By-Law had been enacted.
• With such widespread non-compliance with the By-Law, it was extremely difficult for the City to enforce construction, fire and electrical safety standards, which were the primary reasons that licensing was instituted in the first place.
• Furthermore, the provisions of the Second Unit Licensing By-Law required a final inspection by a Municipal Law Enforcement Officer (MLEO) to confirm that the property met all requirements of the Zoning By-Law 0225-2007 and the Property Standards By-Law 654-98, as well as the requirements of the Second Unit Licensing By-Law itself. This requirement had the practical impact of triggering the issuance by MLEO’s of notices of contravention for many issues where no actual complaint had been received, (such as where the MLEO’s found over-width driveways, debris or accessory structure setback violations).  The City prefers to maintain community standards on a complaints basis, but under the Second Unit Licensing By-Law, MLEO’s had no choice but to become proactive, because they were being required to certify in writing that the property did not violate a host of other By-Laws.

 

 

LICENSING REQUIREMENTS WERE ABOLISHED ON JUNE 8, 2016

• As of June 8, 2016, the Licensing By-Law was repealed and a new Second Units Registration By-Law 114-16 was enacted.
• The old Application Fee and annual Renewal Fees have been removed. Registration of Second Units is now required for all legal Second Units, whether new or existing.  Registration will be a one-time process, without the need for annual renewals.  Registration under the By-Law is free, bringing Mississauga more in line with most other GTA municipalities, including Toronto, which also has a no-charge one-time registration system.
• Under By-Law 114-16, the applicant for registration must satisfy the Registrar that the Second Unit complies with the Building Code, Fire Code, Electrical Safety Code, Zoning By-Law 225-07, the Second Units Registration By-Law, and “any other applicable law”. The precise means of satisfying the Registrar have not been revealed, nor has the City released application forms, which might clarify the exact process.  However, early indications are that the process will be conducted through the Building Permit Application process and will not involve final inspection of sundry municipal By-Laws by MLEO’s in the absence of specific complaints.
• Taken together, it would appear that the Second Unit Registration system will be cheaper, faster and more streamlined for homeowners. It will generate fewer secondary contravention notices and fines.  Whether it will significantly increase compliance remains to be seen, however.  In this regard, it must be noted that Section 19 of the new By-Law provides that:

“By submitting an application to register a Second Unit, the Owner consents to an inspection by an Inspector who may at any reasonable time enter upon the Dwelling to make an inspection to ensure that all the provisions of this By-Law are complied with.”

• Given that compliance with the Second Units Registration By-Law requires compliance with a myriad of other laws, the potential for enforcement action is broad, despite the fact that the right of entry for inspections does not extend to the Second Unit itself unless the occupant consents.
• In addition to penalties under the Provincial Offences Act and the Municipal Act, for contravention of the By-Law (including failing to register) Part 10 of the By-Law provides for penalties of up to:

–  $25,000 for individuals, and

–  $50,000 for corporations.

• Finally, it should be noted that while there was a right of appeal to the quasi-judicial Mississauga Appeal Tribunal under the old Second Unit Licensing By-Law, the Registrar’s decision to refuse to register or to revoke a registration under the new Second Units Registration By-Law is “final”.

 

WHAT REALTORS NEED TO KNOW

• While the change to a registration system will be welcome news for homeowners who want to create Second Units, Realtors must fully understand the implications for their professional obligations.
• The City will now maintain a Second Units Registry. All 486 previously licenced or grandfathered units have been entered on the Registry and hopefully, these numbers will grow rapidly.  The Second Units Registry has now been posted online, with some additional basic information on the new registration system.  You can find this at the following link: http://www.mississauga.ca/portal/residents/housingchoicessecondunits
• This is an extremely convenient way of quickly checking whether a property in the City of Mississauga does or does not contain a legal Second Unit. However, it is our view that the ease of checking the status of any property will lead to an eventual RECO determination that Realtors are fixed with this knowledge and cannot claim to be ignorant of the legal status of any basement or other Second Unit in the City.  We are of the view that the commonly seen “no representation as to the status of the basement apartment”, will be insufficient to protect Realtors who fail to disclose the illegal status of a Second Unit which they know, or ought to know, is in fact illegal because it is unregistered.  Keep in mind that a Buyer who assumes or creates a tenancy in an unregistered Second Unit is liable for fines up to and possibly exceeding $50,000.
• Consider the following excerpts from the Real Estate and Business Brokers’ Code of Ethics (my emphasis):

5. A registrant shall provide conscientious service to the registrant’s clients and customers and shall demonstrate reasonable knowledge, skill, judgment and competence in providing those services.

Material facts

21. (1)A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall take reasonable steps to determine the material facts relating to the acquisition or disposition and, at the earliest practicable opportunity, shall disclose the material facts to the client.

(2)  A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson.

• There can be little doubt that the legal status of a basement apartment or in-law suite is a material fact in the purchase of a property containing such a unit. Therefore, Real Estate Professionals should consider it their duty to check the Second Unit Registry when appropriate and to advise their customers and clients that they must register any Second Unit under the City’s by-laws.  It would be advisable to recommend professional legal advice when such advice is necessary.

 

As always, we are here to help answer any questions.

[This bulletin provides general information on a complex topic and is not to be taken as legal advice on any particular situation.  For advice or information on a specific property or situation, please contact us or another real estate lawyer]

 

singh lyn LLP  /    Castle Lawyers

Barristers & Solicitors

 

Leonard R. Lyn, B.A.,B.L.,J.D.

Rebecca O. Khan, B.A.(Hons), LL.B., LL.M.

Skyport Corporate Centre 2355 Derry Road East, Suite 52 Mississauga, ON,  L5S 1V6

1270 Central Pkwy West Suite 101 Mississauga, ON,  L5C 4P4

 

Call us at (905) 293-9800  /  web: OntarioLawyer.com  /   @OntarioLawyer1