Short-term rental condominiums operated through online companies like AirBnB and VRBO are becoming an increasingly popular choice for travellers and condominium unit owners alike. Travellers appreciate the sense of home, convenience, affordability and amenities that a privately owned condominium provides, while condominium owners are able to capitalize on their properties to a much greater extent than conventional long-term rentals. However, many condominium corporations do not want their properties being used for temporary, hotel-style accommodations, and they are starting to implement regulations to prohibit condominium owners from operating their units in this fashion. Occasionally, condominium boards are even pursuing legal remedies in court.
In Alberta, condominiums are governed by the Condominium Property Act (the "Act") which does not contemplate short-term rental accommodation. The few sections that do address rentals are wholly inapplicable to AirBnB-style arrangements due to their short length of stay, which is typically only a few days. If problems arise, the condominium board does not usually even have time to act before guests check out.
Instead, condominium boards are relying on provisions in the corporation's bylaws, such as single-family dwelling requirements and prohibitions on commercial activity involving the attendance of the general public to the unit, in order to stop short-term rentals. But every condominium corporation is different and not all bylaws contain these types of rules. However, even if the bylaws are silent in this respect, they usually contain provisions to enable the condominium corporation to charge the unit owner for any damages caused by his or her guests to the common areas of the condominium or to other units.
There is also a provision in the Act that prohibits a condominium corporation's bylaws from restricting an owner's right to transfer, lease or otherwise deal with his unit. However, it is currently unclear whether these short-term rentals would be protected by this section. One could argue that they are not actually rentals at all but licenses, no different from traditional hotels or bed & breakfasts. In that case, condominium corporations are entirely within their rights to pass and enforce bylaws limiting or restricting these short-term stays.
Not all condominium corporations are resisting short-term rentals, and some are even designed to facilitate the concept. Nonetheless, any unit owner interested in offering his or her condominium unit to the public for short-term accommodation needs to be aware of several things.
First, whether a rental or a license, offering your unit to the public for accommodation redefines it as a public place for the purpose of Alberta health legislation. This means you must maintain your unit in accordance with minimum housing, health and safety standards, and you may be subject to heavy fines should you fail to do so.
Second, you need to maintain sufficient insurance in the event your guests cause any damage to the common property, other units, or the property of other unit owners of the condominium. Ideally that insurance will also cover damage to your own unit. Rental websites may claim to provide such insurance for you, but the chances of being fully compensated by that third party insurance for the acts of a guest are slim.
From a zoning perspective, operating your unit as a short-term rental could require you to obtain a business license and possibly development permits. This may take several weeks or more to complete, and may require a site visit from local fire and rescue staff and/or public health officials. The zoning for your condominium unit may even prohibit you from operating short-term accommodations in your unit. These are all things you need to check in advance of listing your unit on AirBnB or VRBO.
Finally, you need to check the bylaws of your condominium corporation, and ensure that you and your guests abide by them at all times. Every condominium is different, and each province has its own unique condominium legislation. We recommend consulting a legal expert in your particular area for more information on operating your condominium unit as a short-term rental, or if your condominium corporation needs assistance dealing with unwanted short-term rental units. Miller Thomson LLP is here to help.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.