Purchases of multi-unit dwellings such as a duplex; triplex; fourplex and so on usually seem like an attractive acquisition especially if the intention is to buy the property as an investment. Each unit can often be rented to a separate tenant and the income from said tenancies is very appealing.

However, it is imperative that proper due diligence be conducted prior to submitting a firm offer on such properties.

We frequently receive an Agreement of Purchase and Sale (the “APS”) for purchases related to such properties that are firm and final. During our off-title searches we sometimes discover that a property in question is not actually legally approved to be used for the purpose that is being sold as. This raises some concerns as appropriate parties such as the lender for the mortgage; the provider for the fire insurance; and the provider for the title insurance have to be informed.

If the APS includes provisions that the Vendor is not making any representations and warranties as to the legal status of the dwelling, then unfortunately there is very little recourse that a Purchaser can seek against the Vendor in such a scenario.

Therefore, it is vital that any offer to purchase such properties include a conditional clause subject to the results of the Building and Zoning searches. This clause should unilaterally allow the Purchaser to terminate the APS with the deposit to be returned in full should the results of the Building and Zoning search reveal any deficiencies or irregularities with regards to the property being sold.

Be on the lookout for a future blog post which will provide insight on the difference between a legal multi-unit dwelling in comparison to a legal non-conforming multi-unit dwelling.

Please feel free to contact one of our lawyers should you have questions about this topic.