Unpermitted suites and renovations in Vancouver: what they mean for a buyer

A lot of homes are presented as renovated when none of the work that mattered was permitted. It happens a lot. People want to do their own kitchen, some electrical, a suite or a big patio out back. You walk in, assume that patio has always been there, and nobody asks. If it was never permitted, the city can make you change it or rip it out and do it properly.

In a hot market, plenty of buyers stopped caring about this. With more selection out there, you don't have to.

If you need that mortgage helper, be very careful. If the suite isn't registered with the city or wasn't built correctly, the city can shut you down. The city does go through publicly listed properties, and a neighbour's complaint can do it too. Then you lose the income you may have qualified your mortgage with, and you'll be forced to bring it up to code. A lot of these suites don't have the proper fire rating on the doors, a separate panel or proper exits.

The same goes for adding one. If you start work on a suite with no permits and the city shows up, you can get a stop work order, and that can cost you months and a lot of money while you're counting on rent that isn't coming in. A client of mine went through exactly this recently.

I spent six years with the Delta Fire Department, so this one gets my attention. If there's a fire and the investigation finds a suite that wasn't permitted and doesn't have the proper fire separation, you could lose your claim. It may not even matter where the fire started. And if someone gets hurt in that suite because the stairs or exits don't meet code, you can be on the hook.

Insurers are doing more of their own checking. Ask your insurer about the specific home before you remove subjects, and tell them about the suite.

This is the part that surprises people. Say you want a heat pump, which needs a permit in the City of Vancouver. If the city finds a deck extension a past owner built without one, it can make you fix or remove that deck before it issues your permit. It brings you into a spider's nest over work you never did.

It can also hit your sale. Lenders may not count unpermitted space, the city can place a notice on title until it's remediated, and the fix can mean opening walls to inspect wiring and plumbing. In extreme cases, an addition that breaks setbacks or density limits may have to come down.

With an unauthorized suite, the seller will likely have a material latent defect form, and a lot of buyers just sign it. Once you've signed, it has been disclosed to you, and that takes the seller off the hook. So go in with your eyes wide open. Have your lawyer read it, and make sure your agent is asking what was permitted and what wasn't.

• Request the city's permit records, and compare them to what's physically there. Pay attention to finished basements, extra bathrooms, the electrical panel, suite conversions, decks and additions.
• Read the Property Disclosure Statement carefully. It tells you what the seller says they know, and some things don't get disclosed.
• Book your own home inspector, and never rely on one supplied by the seller.
• If the rent is part of your plan, ask your mortgage broker whether it can be counted, and whether the suite's legal status changes that.
• On a pre-1990 home, remember that any work needs a hazardous materials survey first. See the hidden costs guide.
• Talk price. Unpermitted work can be negotiated once it's on the table, as long as you know what it will take to fix.