Bonus Units - Can you rent it out?

[Allan Wu]

Hi - I am looking at investing in a true Duplex. The house has a bonus basement unit. Are there concerns with renting out the unit as a 3rd bonus unit?

[Michael G.]

I strongly recommend you do not rent the basement as a unit. No matter how much of a livable space it may resemble, if the basement or garden level isn't legal habitable space, you are taking on significant risk renting it. Here are some scenarios that may help you make this decision:

1. Fire caused due to illegal tenancy in basement may void home insurance coverage (i.e. stoves are not permitted in basement)

2. In the event of a fire caused by an illegal tenancy, injuries or death sustained by tenants in your building may result in criminal charges against you. 

3. Renting an illegal unit does not offer you the protections a traditional rental would. Your tenant could not pay rent and there would be little you can do about it on an eviction standpoint. They can also report you to the city which may result in fines or civil penalties.