As Airbnb usage has continued to increase amongst condominiums in Ontario, there have been many interested parties (condominium corporations, owners, tenants, property managers and lawyers) who have been waiting for further direction from the courts.
In a recent case in Ottawa, an issue arose as to whether Airbnb usage was in contravention of the condominium corporation's "single family use" requirement in its declaration. In this case, there was no specific wording in the declaration that limited short-term rentals. The Board of Directors subsequently passed a rule requiring that tenancies be at least four months. A group of owners then moved to set aside the rule as being unreasonable.
Since there was no wording in the declaration requiring tenancies to be at least four months, the case was decided on the Judge's interpretation of the meaning of "single family use" in the declaration.
The Judge found that "single family use cannot be interpreted to include one's operation of a hotel-like business, with units being offered to complete strangers on the internet, on a repeated basis, for durations as short as a single night." Based on the Judge's interpretation, the Airbnb listings breached the "single family use" clause in the declaration.
Based on this precedent, it will be extremely difficult for Judge's in the future to find that similar rules (which limit short term rentals for a specific period of time) are unreasonable.
There are a few things, however, to keep in mind with this decision going forward.
First, it is possible that this case could be appealed. The owners will have 30 days to file a notice of appeal.
Second, while the precedent is extremely helpful for other condominium corporations and property managers, the decision on its own may not act as much of a deterrent for owners and tenants in other buildings. One of the owners in this case was a lawyer. He challenged the rule in question and a lengthy court application ensued. It has, however, been rare for these matters to go to court because in most instances owners are only using Airbnb or other similar services for short periods of time. In many instances, it hasn't been possible for condominium corporations to commence court applications because the short-term rentals were completed by the time the condominium corporation decided to go to court. In other words, the cases had become "moot."
One way to truly deter owners and tenants from using Airbnb will be if the City of Toronto begins imposing significant fines on Airbnb (as a company) for allowing short-term rentals in buildings that specifically prevent short-term rentals. These fines/ordinances have already been imposed in several cities in the United States. Until there is more political pressure imposed to enforce these rules, condominium corporations are going to be left with having to commence similar court applications. While subsequent condominium corporations will likely be successful in enforcing compliance, the time and cost could be much better spent elsewhere. Owners will try to find ways to manipulate the system until such time as the local municipalities (and perhaps the province) become involved.
About Mackrell International - Canada - MacDonald Sager Manis LLP is a full service business law firm in Toronto, Ontario and a member of Mackrell International. Mackrell International - Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.
This article is intended to be an overview and is for informational purposes only.