Oh Oh, One Of My Hamilton Multis Getting Hit By Zoning Dept - Now What??

[ClintL]

Well, this is interesting (and unfortunate). Just a few days after I closed on a fourplex in Hamilton, one of the tenants told me that a city zoning inspector came around snooping, took photos and tried to get tenants to sign some sort of document. I haven't received any official notices from the city yet but expecting the worse.



I'm now pretty sure that the inspector came around as a result of complaints made before my time. What I failed to do during my initial due diligence is ask the tenants how they felt about each other - apparently, some of these tenants have caused unwanted attention resulting in a few visits from the cops. These incidents may have been what triggered the neighbourhood complaints.



So looks like I've inherited a problem. Now I'm probably faced with the possibility of having to turn this fourplex into a duplex as well as a fine.



On the plus side, both my prop mgr and mortgage broker do not think that in the long term, this will pose a huge issue. After renos, I'll be able to raise rents due to larger, renovated units and get higher level tenants. The rental income will be almost the same.



I just have never dealt with such an issue before so don't know what to expect.



How long does it usually take before I have to go to court for this?



Will they allow me to reno to compliance for at least a triplex?



How long will affected tenants have before they must vacate?



What will be my fine, especially given that I just acquired this property?



If I become proactive and start the reno process to turn the property into a duplex before a court date, will this help me in any way?



Any help on these questions would be greatly appreciated.

 

[ShannonMurree]

Hey Clint

Sorry to hear about the challenges. Now we know the importance of always doing our diligence!



What is the MLS sales history on this property and can it be grandfathered in or anything like that so you can keep the present use?

 

[markl]

To be compliant you need to have only 2 tenants in there.



You do not need to renovate before the court date.



To get a triplex each unit must be above grade by at least 50% and have a minimum sq ft of 700.



I would get the tenants out and work from there possibly call the city in yourself to show you are compliant.



Regards,

 

[ClintL]

I've since chatted online with a few others who got into similar situations with the city of Hamilton and looks like it takes awhile for things to get to court and the fine will be about $1000. I've discussed this with my mortgage broker to see what the future possible consequences are from a future financing point of view and according to him, it might actually turn out better in the long run.



It won't be hard for me to convert it back into a duplex. Moving one door and re-opening another doorway that was previously there in between the first floor units will be all that's needed. Then I have 2 separate, 2 level units and when remarketed as large 3-4 BR apartments (with new flooring/paint), I'll get higher market rents. From a monthly cash flow point of view, it will almost be the same as before but with better tenants.



The one thing I failed to do when doing my initial due diligence with the current tenants was to ask them how they felt about each other. Even REIN doesn't teach us to ask this. I didn't know that they had called the cops on each other before! I think the neighbours got tired of this and made the complaint to the city as the incident that sparked the city involvement occurred 2 months before my time.



One tenant is leaving at the end of July and we are trying a way to get the others out, including the tenants in the top floor who are not in a risk unit but is one of the trouble makers.

 

[ClintL]

I guess a basement apartment in there would not qualify since all of it is below grade ... right?

 

[markl]

As of right now probably not. The province has put in legislation that would allow it and the city has not followed suit to date. It is a work in progress at the moment.