Many rentals are basement or other suites in your own home. Helpful ground rules to help you harmoniously share space:

Ambiguous Boundaries

If you're sharing common areas with your tenant, or tenants are sharing common areas with each other, it's important to clarify use of these areas and their boundaries in the rental agreement.

• Tenants renting a secondary suite might be uncertain as to whether or not they’re entitled to exclusive use of any part of the yard. In a home with upper and lower suites, the tenant in the lower suite might assume that the backyard is for his or her own use, while the upper occupants may only use the balcony. Sometimes, tenants may consider the backyard to be their own personal storage area, or a place where they can leave debris. Yard disputes are foreseeable and preventable, if your rental agreement is clear about the use of the yard and all common areas.
• Physical barriers such as fences or hedges could be installed to create exclusive-use areas. If it is impractical to install physical barriers, then boundaries must be created through terms in the rental agreement. For example, you could have a clause in the agreement specifying that while the interior of the secondary suite is for the tenant’s exclusive use, all other parts of the property are considered common-use areas. Your agreement would prohibit the tenant from leaving items on common property without the landlord’s permission.
• Parking problems are also foreseeable and preventable. Do you want your tenant to park on a certain part of the driveway and not elsewhere or restrict the number of vehicles? Decide what you want ahead of time and specify the parking rules in the rental agreement.
• If the electrical panel, hot water tank or furnace are located within the secondary suite, know that you cannot access them without receiving the tenant’s consent to enter the home, or by serving written notice beforehand as required by provincial tenancy law. You could enter the suite if it’s an emergency, but the law has a narrow definition of “emergency.” Generally, it’s only an emergency if property or people are at immediate risk of harm. You and your tenants should agree beforehand to a contingency plan.

Shared Laundry and Utility Bills

If you share laundry facilities with your tenant, are there certain days of the week that you want the machines reserved for yourself? This must be outlined in the rental agreement. Don’t restrict your tenant’s use of laundry facilities too much. Try for a schedule with some flexibility.

Secondary suites typically share electric or gas meters. Landlords usually expect secondary suite tenants to pay a percentage of the total monthly utility bill. Though reasonable in theory, this procedure has some foreseeable drawbacks.

• The tenant might dispute the percentage of the bill assigned and complain about perceived excessive usage by his or her neighbour or landlord.
• You might want your secondary suite tenant to pay 50 per cent of the utilities, but some prospective tenants might try to negotiate a lower amount. They might say that they don’t plan to use utilities extensively and that it is unfair to be charged 50 per cent of the bill. You could remain firm, but the prospective tenants might decide to look elsewhere for a rental. Or, they might accept the arrangement, complain frequently, and otherwise take up your time and energy every time they receive the utility bill. Or they might move out soon afterwards, leaving you with a premature vacancy.
• The tenant might periodically fail to remit payment in a timely manner, thereby doubling your bill-collecting responsibilities.

How could you avoid all these problems? Calculate an estimate of utility usage by the secondary suite for the year and roll the average monthly cost into the rent. In other words, if you plan to rent the suite for $700 and estimate that your tenant will pay $75 per month for utilities on average, offer the suite at $775 with heat and electricity included. This way your prospective tenants will know up front where they stand with utilities.

This method is not without disadvantages. Because the tenant will not see the utility bill each month, there is a risk he or she will use utilities excessively or carelessly. Try reducing this risk by taking pre-emptive measures, such as serving a notice reminding the tenant that the rent includes a reasonable use of utilities, but that substantial overuse could result in a rent increase. Also, your lease agreement should have a clause prohibiting the tenant from installing any other major appliances or “energy eaters” such as second fridges without the express permission of the landlord.

Sound and Smell Transfer

In a legal multi-family apartment complex, the building code requires significant soundproofing between units. But the soundproofing found between the floors of a single-family home that contains a secondary suite is often inadequate. Even the best of tenants run the risk of being labeled noisy when there are inadequate sound barriers.

• If it’s impractical and costly to retrofit walls with soundproofing insulation, identify where the potential for sound transfer is greatest, and “spot fix” the problem. For instance, if the home consists of upper- and lower-level units, the upper unit should have wall-to-wall carpeting with thick underlay to minimize sound transfer. It would be problematic for the upper suite to have laminate or hardwood flooring. If this type of flooring is already in the upper suite and cannot be replaced, then make extensive use of area rugs at the very least. If you have a tenant above you, or one tenant above another, ask the upper-level tenant to use area rugs as a term of the rental agreement, but recognize that you may be expected to subsidize some or all of the cost.
• Sometimes only a door serves as separation between the primary living area and the secondary suite. Interior doors are ineffective at reducing sound transfer. If you replace the door with an insulated wall, you might contravene fire safety bylaws in your area. Consider replacing the door with an exterior grade, solid-core door instead.
• Include noise reduction practices in your rental agreement. For instance, the rentalagreement should have a clause restricting the operation of stereo equipment and major appliances such as the washer, dryer, and dishwasher to daylight hours only.
• Keep in mind that if you want such clauses to be effective, the tenant will expect you to adhere to the same rules. Owning a secondary suite means a restriction on the freedoms you normally enjoy as a homeowner – this is part of the price that secondary suite owners pay for the benefit of the extra rental income.
• Another transfer issue relates to not just sound, but also cooking odours. Ensure that your tenants have access to a high-quality range hood and insist they use it while cooking. Also, if only a door serves as separation between the tenant’s suite and your own, then apply weatherstripping to the door to make it as airtight as possible.

Even if these measures are implemented, the barriers between one living area and the other will never be up to the standard found in a multi-family building. If you want to earn extra income from secondary suites, be prepared to tolerate occasional noise or cooking smells.

Five Steps of Purchasing a Foreclosure

Step 1: View the Property

Depending on the situation, it can sometimes be a challenge to view the property, particularly in circumstances where the owner refuses to cooperate with the viewing, listing and showing of the property. But it is essential that you see what you’re buying, so ensure that you do view it.

Step 2: Do Your Due Diligence

Make sure you are happy with the property since it is purchased “as is, where is”. Unlike a standard property purchase, with a foreclosed property at the time of completion or possession, the property may not be in the exact condition it was in when you had viewed it. Investigate the zoning and any applicable bylaws. Ensure you have financing in place, or are pre-approved for a mortgage.

Step 3: Submit an Offer

Make an offer to the listing real estate agent. All offers must be free of any buyer’s subjects, and only “subject to court approval”. It is very important to note once your offer is accepted by the lender you are contractually bound to purchase the property if the court approves your offer. Be sure to include your full legal name on the offer, as this is what will be listed on the court order if you are successful in purchasing the property. Additionally, if there are two people purchasing the property, such as spouses, you will want to clearly indicate whether the property is being purchased as joint tenants, or tenants in common. Once an offer has been accepted by the lender, the lender’s lawyer will schedule a court date to present the offer to the court for approval. Ensure the offer is the highest price you are comfortable with, because you may only have one chance for the court to review your offer.

Step 4: Competing Offers and Contesting the Sale

A few days prior to the court hearing, the offer price will become public, and other potential buyers will have the opportunity to outbid the original offer on the court date. Additionally, other creditors and even the current owner(s) may attempt to contest the sale price if they believe the property has a higher value.

Step 5: Court Date

All offers must be presented in a sealed envelope containing a bank draft for the deposit. The court will usually award the purchase of the property to the highest offer. The original buyer should be present in court to submit a higher sealed bid if there are other potential buyers in attendance presenting offers. Once the court accepts an offer and approves of the sale, a court order is granted in the name of the successful bidder. The completion and possession date for the purchase is usually set for 14 days following the date of the court order.

Risks of Purchasing a Foreclosure Property

The main risk of purchasing a foreclosure property, is that it is purchased on an “as is, where is” basis. Sometimes fixtures such as lights, faucets and cabinets may have been removed from the property or are damaged. The property is often left unclean with unwanted trash and items left behind.

An additional risk to consider when purchasing a foreclosed property is the former owner or occupants may not vacate the property in accordance with the court order. In this situation, the vendor is legally required to make an application to the court for a “writ of possession” and receive assistance from a court bailiff to evict and remove the occupants. This could lead to a delay in taking possession of the property.

Bearing all of this in mind, don’t shy away from considering foreclosed properties, because at the end of the day you can be purchasing a property you love at a discounted price. It is rare that an owner occupier will hinder the sale process since it is not in their best interest to do so. Understanding the process and potential risks of purchasing a foreclosed property will allow you to navigate purchase with greater knowledge and confidence.