Many condominium corporations have had to struggle with owners (or occupants) leasing their units on short-term basis, through AirBNB or other similar short-term rental organizations. These kinds of rentals increase traffic and the burden on the rest of the condominium community, while reducing the safety and security of all. This post aims at providing corporations with some guidance as to what they can do to control and prevent such short-term leases.
AirBNB and other similar providers are web-based businesses providing an alternative to hotel accommodations by connecting out-of-town travelers to owners who want to rent out their homes. These rentals are usually for short periods of time (often only for a few nights at a time). These arrangements constitute a real bargain for the traveler (be it tourist or business traveler) as they obtain a fully furnished and all-inclusive home at rates which are usually cheaper than those of hotels. These short-term leases can be very lucrative for the owners who are able to generate far more income on their unit than if the unit was leased for the year.
Unfortunately, this business is often conducted at the detriment of other residents who see their condominium turned into a hotel. This results in increased traffic (with strangers coming and going at all hours of the day and night) and in a reduced sense of security and community. The renters are not informed of the condominium rules and by-laws, and they often impose an additional burden on the rest of the community. What the owners do not realize is that they are not just renting their unit out, they are, in effect, offering to their short-term tenants the common elements and all of the shared facilities. The other owners now have to deal with strangers in the lobby, pool, sauna and gym and with increase traffic in their garage. Often, renters use visitors’ parking spots, leaving less to the true visitors.
What can condominium corporations do about it?
At the present time, AirBNB is legal in all provinces. The province of Québec is looking to regulate (and tax) this business. Still, condominium corporations have many tools to prevent or control this kind of short-term leasing:
- First, have a look at your declaration. Some declarations already contain language limiting the use of units to “private single families” or to “residential purposes”. Other declarations prohibit rooming, boarding as well as transient or hotel-like occupancy. If your declaration does not contain adequate language to prevent this kind of leasing, the corporation can consider amending it. We blogged already on how difficult it may be to amend a declaration.
- Second, a far easier alternative to amending the declaration is to adopt a rule preventing this kind of leasing. Indeed, a corporation can adopt rules to promote the safety, security or welfare of the owners or to prevent unreasonable interference with the use/enjoyment of the common elements and units. A corporation can therefore adopt rules regulating the leasing of unit. A common example of such a rule could be to prohibit short-term leases (for instance, the rule could prohibit leases of less than 3 months). The language of the rule is key to ensure that they resist the scrutiny of the courts should an owner contest the rule. Corporations must also remain aware of the potential requirement to grandfather existing owners.
- Third, look into whether the use being made of the unit complies with your local municipal by-laws. The condominium complex may be zoned in such a way as to prohibit certain businesses.
- Finally, inquire as to whether short-term leasing to AirBNB would put at risk the corporation’s insurance. This may be another ground to prohibit short-term leases.
At the end of the day, the corporation’s success to prevent short term leasing will be a question of enforcement and compliance. It is important to properly document your file and gather as much evidence as possible before turning the matter to the corporation’s lawyer. A lot of evidence on the short-term leasing can be found on the internet since this is how the owner advertise his or her unit. Even better, the short-term tenants often rate or comment on the accommodations. This will provide very good evidence of the existence of short-term rentals.
- We have successfully dealt with many of these situations for our clients and have been able to recover all legal fees from the owner in breach of the rule.
- Airbnb is incompatible with the ‘Single family’ provision of condo declaration
- Can condo owners lease out their parking space
Note: A more exhaustive version of this post can be found on Gowlings’ Knowledge Centre.