Airbnb can leave hosts open to legal action

Airbnb is a fairly new company, founded in 2008, that uses a social networking model to connect travellers with hosts willing to sublet space to them for a short period of time. Available spaces range from a room in a house or apartment, where the host may even cook you meals, to whole apartments or houses available while the host is elsewhere.

Since its inception, Airbnb has come under fire from the hotel and tourism sector and has been the target of legal action, including in Quebec, New York City and San Francisco. At this time, it is not illegal in the province of Ontario or in the city of Toronto to do a short-term rental or sublet. However, in many cases, there are still a number of issues that can leave hosts facing legal action.

If a host is a tenant, they could face action from their landlord and even eviction if they are hosting in a rental space without the consent of the owner. More importantly in Ontario, an Airbnb transaction could be found to violate the Residential Tenancies Act.

Under s.134(3) a tenant may not sublet their unit for rent payable by one or more persons for rent that is greater than what is lawfully charged by the landlord for the unit. If a host is charging guests $100 per night, while renting a $1,100 per month apartment, that would contravene the act if done so for more than 11 days – even if this was not successive and was to different people.

Under the s.100 of the act, a tenant can face eviction for transferring occupancy or subletting a rental unit without the consent of the landlord. Courts in Germany have held that transfer of residence to tourists is not covered by permission to sublet; while this ruling is not binding in Canadian law, this interpretation could be influential if the matter was brought into Canadian courts.

Even if you are the owner of the space you are renting, you could still face problems. If something happens to your property while you are hosting, whether or not you are present, your insurance company may be able to deny you coverage. From an insurance perspective, the risk to a property increases when strangers are using your home, whether as an official rental or sublet or as something temporary. If hosting tourists through Airbnb or any similar site is something you are interested in, it is imperative that you let your insurer know. While this could cause an increase in your premiums, this would prevent you from being denied coverage for putting your home at an unnecessary risk without proper coverage.

For condominium owners, it is quite likely that any short-term rental of your space violates the rules of the condominium by which you agreed to abide in the initial sale. For safety and security reasons, many condominiums regulate the entry and stay of guests in general through locked lobby doors, key fob activated elevators, and even by requiring tenants to check guests in and out with a concierge or front desk.

By letting strangers inside the protected building, short-term rental on sites like Airbnb increases the risk to the condominium building as a whole and as such is usually dealt with in the rules and bylaws of the building. If an owner is hosting strangers in their unit, anyone in the building could report them to the condominium board. If they are found to be violating the rules, they could be fined or even evicted. If you are interested in hosting tourists in your condominium through Airbnb or any similar site, you need to check the rules and bylaws yourself or with the help of a lawyer, to ensure that you will not be in violation.

While there is nothing in place at this time in Ontario or Toronto, you could also face increased taxation from the provincial or municipal government in the future if the governments decide to enact laws like those of other provinces and cities, which require tourism permits similar to those for hotels and other lodgings for short-term rentals or sublets facilitated by Airbnb.