Canada: Can Condo Corporations Prohibit Short-Term Rentals During The COVID-19 Pandemic?

We are now in a time of social distancing, self-isolation and quarantines. Depending on how the COVID-19 pandemic progresses, there may be further and more stringent measures.

Many unit owners in condominium corporations operate those units as short-term rental units through Airbnb and other short term rental sites. In some cases, this is permitted by the corporation's declaration, by-laws or rules. Where that is the case, corporations may still wish to prevent short-term rentals during this pandemic.

There is a solution. Even the corporation's declaration must bow before the Condominium Act, 1998, SO 1998, c. 19 (the "Condo Act"). Section 117 of the Condo Act prevents anyone from carrying on an activity that "is likely ... to cause injury to an individual." Courts have been willing to enforce this section where unit owners have caused health risks to others through the use of their property.¹

Anecdotally, it appears that some individuals are seeking out medium term rentals through Airbnb and other services in which to self-isolate or quarantine away from family. Condominium buildings are already sites in which it is difficult to self-isolate given the proximity of units and the shared spaces.

If a unit owner was to permit the short-term rental of their unit to someone with COVID-19, it could pose a risk to other unit owners.

Corporations could reasonably conclude that they should act to prevent such short-term rentals for the duration of the pandemic.

Such a decision is not without risk. Any corporation with significant short-term rentals likely has unit owners who count on the income from those properties. They may be strongly motivated to challenge such a decision. In the immediate future, there are no real avenues for aggrieved unit owners to challenge decisions to prohibit short-term rentals. Currently, the courts are closed to all but the most urgent cases.

A corporation wishing to ban short-term rentals should act with the goal of post-hoc justification of its decision in mind. If challenged, the corporation will need to establish that there was a general risk (and not that each specific rental was a risk).² In the current circumstances, that seems reasonable.

Corporations should take steps to ensure their position is targeted to the risk. A blanket ban on all rentals under six-months without an end date or a plan to review it may be viewed as a pre-textual ban on short-term rentals. On the other hand, prohibiting rentals of less than 30 days for a period of a few weeks (or "for the duration of the pandemic") could be justified as targeted at the risk.

If you have questions or wish to discuss the implications for your corporation, please do not hesitate to contact us.

Footnotes

1 In Wexler v. Carleton Condominium Corp. No. 28, 2015 CarswellOnt 20652 (Ont. S.C.J.), the court held that the condominium corporation was entitled, under s. 117 to enter into a unit and clean up pigeon droppings and feathers on a balcony as these posed a health and safety risk to others. Similarly, in Carleton Condominium Corp. No. 25 v. Eagan, 2015 CarswellOnt 10108 (Ont. S.C.J.), the court held that a unit owner's failure to deal with a bed bug infestation was a breach of s. 117.

2 In one case, Metropolitan Toronto Condominium Corp. No. 985 v. Vanduzer, 2010 CarswellOnt 761 (Ont. S.C.J.), the courts permitted a corporation to block the installation of a gazebo on exclusive-use common elements which the unit owner intended to weigh down with planters. The risk was that, unless it was actually fixed to the common elements, the gazebo might blow away. The court reasoned that the prohibition against installing 'unsafe' things was not permission to do anything not explicitly proven unsafe.

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.