Ontario Real Estate Source
By Brian Madigan LL.B.
This is the lesson learned by an elderly Toronto couple. Mr. and Mrs. Tseng purchased their older turn of the century home on Brunswick Avenue in the Kensington Market area of Toronto in 2006 for $718,000.
That seemed like a lot of money for a house, particularly when the wooden two storey extension at the rear was falling apart. They hired a contractor to tear it down and replace it with a new modern, soundly constructed two storey addition. So, what was the problem? Simple, they never obtained a building permit.
Sometimes, people go by the mantra “….it’s easier to obtain forgiveness… than ask for permission…”. However, when it comes to governments and courts, that’s not always the case.
In this case, not everyone was happy with the new construction. It was bigger than the old wooden addition and blocked the sunlight. The resident’s association didn’t want this sort of cavalier approach to building to take place in their neighbourhood.
The Tsengs sought permission after the fact. Their application was turned down at every level, including the Building department of the City of Toronto, the Committee of Adjustment, the Ontario Municipal Board, the Divisional Court and the Ontario Court of Appeal.
Ultimately, they even went to the United Nations in Geneva, Switzerland with a human rights complaint.
The new addition cost about $80,000 to construct, or about 11% of the value of the property, and it should have added that much or more to the house.
However, you probably guessed it: all the appeals are over and the Tsengs have been ordered to demolish the addition. Their costs are not insignificant. Last year, they estimated that their legal costs exceeded $200,000. They also owe at least another $20,000 to the City. On top of that, there will be the cost of demolition. Conservatively, we have $220,000 in legals, $20,000 in costs to the City, $30,000 in demolition expenses, and the original $80,000 to build. That all adds up to $350,000 for an addition that isn’t there. And, of course, there is the loss of value associated with the removal of the old addition.
All in all, this is a mess!
Almost half the value of the property was simply thrown away. This isn’t the way a good investment in real estate is supposed to work.
What should have happened?
The original wooden addition likely represented a legal non-conforming use. The Tsengs only wanted an additional one meter in depth. They should have applied for a building permit and if denied, would have had the opportunity to go to the Committee of adjustment for a minor variance. Instead, the contractor demolished the older structure. That left them without the legal non-conforming component for their application.
Now, the “new” addition needed to comply with the current zoning and building standards. This meant that the new addition was 10 meters too deep, rather than just one. But, the old addition had now been long since removed. This legal escapade took over 6 years. And, as you can well imagine, you couldn’t sell this property to anyone in the meantime.
Their worst case scenario would have been to repair, rectify and improve their old wooden addition. From a construction perspective, it would have been cheaper to tear it down and rebuild, but from a legal perspective, it would have been permitted to stay.
If there are some lessons here:
1) apply for a building permit,
2) don’t demolish anything until you have the new permit in hand,
3) get legal advice,
4) don’t let your contractor give you legal advice “for free”, you know what that’s worth,
5) don’t throw money at the legal system,
6) invest in the property by having the funds expended add to the value.
And, of course, forget about that mantra: “….it’s easier to obtain forgiveness… than ask for permission…”.
Get the building permit!
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through RE/MAX West Realty Inc., Brokerage 416-745-2300.