Real Estate

Insurance and potential risk/liability on renting out an illegal basement

  • Last Updated:
  • Aug 10th, 2023 3:00 pm
Deal Addict
Mar 25, 2018
1377 posts
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Insurance and potential risk/liability on renting out an illegal basement

If you have a basement in your principal residence that does not comply with fire code (no escape to outside, no fire resistant door etc.), and you rent it out to a tenant. How do you handle the insurance and risks?
Do you tell your insurer about the rental or you just don't tell them?
If you don't tell, and there is a fire, with injury or fatality for the basement dweller (either the tenant or yourself), will they likely reject your claim?
Will you likely be charged as landlord in that case by the City? What kind of exposure are we talking about?

Or most people just ignore these and hope nothing bad ever happen to them?
39 replies
Newbie
Dec 17, 2019
87 posts
75 upvotes
You literally just answered your own questions lol
Sr. Member
Aug 22, 2012
836 posts
903 upvotes
Mark Town
in the past decade there are quite a few deaths in illegal basements in Toronto. None of the landlords was criminally charged.
Last edited by sherwoodRFD on Feb 21st, 2023 1:34 pm, edited 1 time in total.
Deal Addict
Dec 3, 2013
1814 posts
3254 upvotes
Somewhere over the r…
sherwoodRFD wrote: in the past decade there are quite a few deaths in illegal basements in Toronto. None of the landlords was charged.
Huh?

A quick google search lists several cases where the landlord was charged and sued civilly after someone died in a fire in an illegal basement apartment in Ontario.
Deal Addict
Dec 6, 2006
2926 posts
1499 upvotes
rfduser123 wrote: If you have a basement in your principal residence that does not comply with fire code (no escape to outside, no fire resistant door etc.), and you rent it out to a tenant. How do you handle the insurance and risks?
Do you tell your insurer about the rental or you just don't tell them?
If you don't tell, and there is a fire, with injury or fatality for the basement dweller (either the tenant or yourself), will they likely reject your claim?
Will you likely be charged as landlord in that case by the City? What kind of exposure are we talking about?

Or most people just ignore these and hope nothing bad ever happen to them?
An individual may be fined $50,000 per offence or one year in jail or both, for violations of the Ontario Fire Code. The landlord (property owner) is also responsible for compliance with the municipality's zoning by-law to ensure that the basement apartment is being used/occupied as permitted by the zoning by-law
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Dec 16, 2015
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Distance: 50 Metres
Dang wannabe landlords creating underground jail spaces…and charging rent for it
To the moon
Deal Addict
Mar 25, 2018
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webworm wrote: An individual may be fined $50,000 per offence or one year in jail or both, for violations of the Ontario Fire Code. The landlord (property owner) is also responsible for compliance with the municipality's zoning by-law to ensure that the basement apartment is being used/occupied as permitted by the zoning by-law
Judging by all the basement rental ad on every plateform, I guess most municipalities are not enforcing this seriously, as they prefer to have the extra rental supply and will only deal with those who have a fire when it happens.
Deal Addict
Dec 3, 2013
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Somewhere over the r…
rfduser123 wrote: Judging by all the basement rental ad on every plateform, I guess most municipalities are not enforcing this seriously, as they prefer to have the extra rental supply and will only deal with those who have a fire when it happens.
This is true. They only act on it when there is a complaint or something like a fire happens.
Municipalities have zero interest in having to deal with housing supply and are letting the private market fill the demand and turning a blind eye.

If municipalities wanted to crack down on illegal housing all they would have to do is pull up rental ads on places such as Marketplace/Kijiji and 99.99% of all rentals could be inspected. Just have to ask yourself why they are not.
Deal Addict
Mar 25, 2018
1377 posts
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In the grand scheme of things, governments at all levels love the idea of "middle class" provide housing for the people at most destitute layer of the population, at the risk and expenses of the "middle class". Despite negative cash flows, risk of unpaid rent. many are still more than willing to play the game. Many new buyers in the last few years probably can not and should not bought unless they have a basement tenant. I now think the appalling LTB delays is part of the design to "tax" the owners who choose to be the bottom feeders and let the bottom layer of the society have free housing without costing a penny to the government. A truly brilliant idea.
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Sep 4, 2005
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Toronto
Did anyone read these articles?

From the first article:
A residential tenant died from severe injuries following a fire in her basement apartment in 2013. The tenant had been asleep in a bedroom of the rooming house when the fire broke out. However, the tenant had no way of escaping because the windows were barred, and the only exit to the apartment was engulfed in flames and smoke. The interior access stairway connecting the basement apartment to the main rooming house was blocked off, thereby leaving only one potential exit and entry point to the basement apartment. As such, the tenant had to wait until the firefighters arrived on scene.


In the second article:
Singhs knowingly operated 73 Humber College Boulevard as a rooming house in an unsafe manner, despite explicit warning and direction from the Toronto Fire Service that the home could not be operated as a rooming house without substantial changes being made to bring the home into compliance with the Fire Code, O. Reg. 213/07. The Crown alleges that the fire occurred shortly after Mr. and Mrs. Singh received this direction from the Toronto Fire Service.
...
Here’s what the Ontario Court of Appeal said.
1. there were no smoke alarms in each upstairs bedroom;
2. the appellant knew that Mr. Dhaliwal [the tenant who died] cooked in his room but failed to take effective measures to prevent this;
...
4. the appellant knew that the smoke alarms that were in the house were not working;
5. when the appellant was advised that he was in breach of the Fire Code, he failed to complete the required upgrades, thereby risking the lives and safety of his individual tenants;
7. had the required interconnected smoke alarms and pull system been installed, they would have been activated within seconds of the fire starting, even before there were flames; and,
8. the required smoke alarm system would have provided the occupants with the crucial time needed to avoid injury.



In both these cases it's like they went out of their way to make these illegal basements unsafe.
It's one thing to skirt the law with an illegal basement. It's another to disobey the fire department when they show up and cite you as having non-fire code compliant unit and tell you what you need to do to comply.
If the second guy installed wireless interlinked smoke detectors, there's a good chance they would have saved lives and this would have all been avoided.
Deal Addict
Mar 25, 2018
1377 posts
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Not surprised by what the slumlords that runs illegal rooming house are willing to do in total disregard of life. I am surprised he did not get charged for criminal negligence, at least.
Deal Addict
Oct 14, 2010
1292 posts
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Toronto
I strongly feel that all illegal dwellings should be taken off the market by municipalities enforcing their laws.

LLs can chose to provide rentals that are upto code or not be in the rental business at all. Period.
Deal Addict
Mar 25, 2018
1377 posts
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budwizestest wrote: I strongly feel that all illegal dwellings should be taken off the market by municipalities enforcing their laws.

LLs can chose to provide rentals that are upto code or not be in the rental business at all. Period.
I wish this is the case.

In many European cities (based on my observations 30+ years ago), private landlords actually took the premium segment of the market, while the goverment took care of the low income renters. Don't think any level of government in Canada is prepared to do that. In the long run, rampant slumlords will make certain areas true slum as in many other places.
Sr. Member
May 7, 2015
951 posts
1529 upvotes
Toronto, ON
Redsanta wrote: Dang wannabe landlords creating underground jail spaces…and charging rent for it
I don’t understand this.

If I made the shittiest place and offered it for rent, and someone came along willing to rent it.

Why do you look down on the landlord?

Seems like mutual benefit no?

If the apartment is illegal blah blah blah.
Why does the tennant not get any negative feedback for willingly engaging in an agreement for that illegal space?
Deal Addict
Dec 3, 2013
1814 posts
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Somewhere over the r…
moeymoeymoeymoe wrote: I don’t understand this.

If I made the shittiest place and offered it for rent, and someone came along willing to rent it.

Why do you look down on the landlord?

Seems like mutual benefit no?

If the apartment is illegal blah blah blah.
Why does the tennant not get any negative feedback for willingly engaging in an agreement for that illegal space?
If you really want to see the thought process go join and lurk in a few tenant groups in Facebook. Read the comments in a few of the for rent ads on marketplace in the GTA. You will get a good chuckle or two, don't forget to bring your popcorn!

Every other post is Landlords are scum because we are capitalizing on a human need, shelter. We should not be able to profit on "shelter" Yet they conveniently forget that the grocery stores they buy their food from or the places they buy their clothes from do the same. They also forget that it's not the landlords job to subsidize housing. They really should be blaming the government but we are convenient scapegoats. Many of them have zero clue on what it actually costs to carry a mortgage and all the other things costs that come with it.

The media perpetuates this with trigger headlines and a lot of gaslighting. They think if landlords just disappeared overnight housing prices would crash and everyone would be able to instantly afford a place and get mortgage. The most vocal are completely out of touch with reality and don't realize the shitstorm that would occur if landlords just disappeared overnight and there were no more landlords.

Even if the slumlords were gone and only good ones remained the anger would still be there.The issue lies with the government, not the landlords but people are just stupid in general when you have mob mentality.
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Dec 4, 2009
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Worriedone wrote: ...but people are just stupid in general...
Qft
"I'm a bit upset. I've been grab by the back without any alert and lubrification"
Lucky
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Dec 24, 2002
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Insurance will only reject the claim if you made a material misrepresentation. You should advise them as most will ask about number of people residing in the residence or if basement is finished.
Deal Addict
Jul 8, 2019
1262 posts
1248 upvotes
Super_Chicken wrote: Did anyone read these articles?

From the first article:
A residential tenant died from severe injuries following a fire in her basement apartment in 2013. The tenant had been asleep in a bedroom of the rooming house when the fire broke out. However, the tenant had no way of escaping because the windows were barred, and the only exit to the apartment was engulfed in flames and smoke. The interior access stairway connecting the basement apartment to the main rooming house was blocked off, thereby leaving only one potential exit and entry point to the basement apartment. As such, the tenant had to wait until the firefighters arrived on scene.


In the second article:
Singhs knowingly operated 73 Humber College Boulevard as a rooming house in an unsafe manner, despite explicit warning and direction from the Toronto Fire Service that the home could not be operated as a rooming house without substantial changes being made to bring the home into compliance with the Fire Code, O. Reg. 213/07. The Crown alleges that the fire occurred shortly after Mr. and Mrs. Singh received this direction from the Toronto Fire Service.
...
Here’s what the Ontario Court of Appeal said.
1. there were no smoke alarms in each upstairs bedroom;
2. the appellant knew that Mr. Dhaliwal [the tenant who died] cooked in his room but failed to take effective measures to prevent this;
...
4. the appellant knew that the smoke alarms that were in the house were not working;
5. when the appellant was advised that he was in breach of the Fire Code, he failed to complete the required upgrades, thereby risking the lives and safety of his individual tenants;
7. had the required interconnected smoke alarms and pull system been installed, they would have been activated within seconds of the fire starting, even before there were flames; and,
8. the required smoke alarm system would have provided the occupants with the crucial time needed to avoid injury.



In both these cases it's like they went out of their way to make these illegal basements unsafe.
It's one thing to skirt the law with an illegal basement. It's another to disobey the fire department when they show up and cite you as having non-fire code compliant unit and tell you what you need to do to comply.
If the second guy installed wireless interlinked smoke detectors, there's a good chance they would have saved lives and this would have all been avoided.
Wow, and the same house 73 Humber College Blvd sold in 2021 with this description:

Fabulous Opportunity For A Great Investment. Large&Spacious 6+1 Bedrooms, 2-Storey On A Large Lot W/Double Detached Tandem Car Garage+Private Concrete Driveway For 6-8 Cars. Finished Basement Apartment With Sep Entrance. Steps To Humber College, Etobicoke General Hospital, Ttc, Brampton/Mississauga Transit, Future Lrt. Ideal For Students Or Family. All Six Rooms Are Being Rented For Female Students For $550 Each. Another $1200 Rental Potential For Basement.

Enclosed Front Porch, Two Kitchens, 3-Fridges, 2-Stoves, Two Sets Of Washer & Dryer. Cold Room. Must Be Seen!


No punishment for the perpetrators and they kept on doing it.

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