Air BnB, Short-Term Rentals, Licenses to Occupy

Many of our clients are struggling with the relatively new phenomenon of short-term rentals within their Strata properties.  Over the past few years, new technological platforms and tools (Air BnB, VRBO, Homeaway, to name a few) have made it simple for homeowners to let out a portion of or all of their home to third parties.  We are Strata Property Managers so don’t profess to have any insightful commentary on the long-term implications of this element of the new “sharing economy” on broader elements of society, but there are impacts on Strata Corporations that have been felt and are likely to continue which are important to discuss.

At many Strata Corporations, particularly those in deeper urban areas (Downtown Vancouver for example), a not insignificant proportion of homes are being leased out by the night or on a short-term basis.  A good number of those Strata Corporations have already passed bylaws to specifically prohibit these leases/licenses.  Frankly, most of these bylaws have had little or no deterring effect.

Before going further, it is important to remind readers that there is a distinction between rentals (which are governed by the Rental Tenancy Act, and are for a minimum of 30 days across the province) and licenses to occupy (which are a commercial endeavour, exempt from the RTA but subject to other applicable legislation not the least of which are City bylaws requiring a business license and the Income Tax Act).  We’ll refer to the latter as “short-term rentals” but the distinction is important. Another thing to note is that Air BnB and other platforms/websites are agnostic as to the difference between the two.  Most of these websites allow the user (the “host”) to choose the minimum duration of the rental.  So, a host may choose to rent out their suite for a minimum of 90 days utilizing Air BnB, still be fully in compliance with local bylaws, and not run afoul of Canada Revenue Agency regulations.  They may be in violation of Strata Property Bylaws which specifically prohibit the use of Air BnB as a particular service, but that subject is beyond the scope of this article.

Where most of the friction exists, of course, are in Strata Corporations that:

1. Have a minimum rental period of 30, 60, 90, 365, etc. days;
2. Specifically prohibit short-term licenses to occupy (an “anti-Air BnB” bylaw);
3. Actively pursue Owners and Tenants who are believed to be in violation of these community standards.

Many of our clients are stuck in between a proverbial rock and a hard place.  The nature of Air BnB and other similar platforms makes it difficult to definitively prove when an Owner/Tenant is utilizing the service to lease out their suite (for privacy reasons, the suite number isn’t disclosed until close to the check-in time, after a booking is made).  Strata Councils want to aggressively pursue people who are using these platforms, but run into a number of significant challenges.  Some examples include:

1. How do you identify suite numbers that are leasing out by the night?  Often times the only “evidence” are relatively anonymous pictures on a website offering a suite for rent by the night, which in and of itself it might be argued isn’t against the bylaws (it is the actual act of renting it out which is);
2. How do you respond to Owners whose Tenants are conducting nightly rentals, in defiance of instructions/prohibitions from the Owner?;
3. How do you know when one renter leaves and the next enters?;
4. Many hosts (by a number of accounts, a growing number) are doing this for a living, and are very aware of the unique challenges that Strata Corporations face in prohibiting short-term rentals, and are armed with a variety of tools to skirt the rules.

These are just a few of the challenges- there are dozens of unique examples from within our own portfolio of clients that demonstrate just how hard it is to “pin it” on an Owner/Tenant utilizing Air BnB.

Some of the strategies we’ve seen our clients undertake, all of which have had varying levels of success and full disclosure, a number of which have resulted in legal action being threatened and/or launched against some of our clients;

1. Actively discouraging Air BnB and similar platforms through signage to dissuade would-be renters;
2. Amending bylaws to require vehicles be registered or towed (and enforcing this);
3. Disabling fobs (a significant source of legal action we’ve seen threatened and initiated);
4. Issuing Fines;
5. Beginning legal action at a cost to the Strata;
6. Approaching individuals believed to be renting an Air BnB and telling them it is not allowed and they need to leave (yes, it happens);
7. Being fully permissive of Air BnB (we have a number of clients who have no problem with the concept);
8. Hiring private detectives (again at a substantial cost) to “prove” when an Air BnB is being conducted.

The City of Vancouver (and other municipalities) are very much struggling to keep up with the complaints being levied against suites conducting short-term rentals.  They openly admit that they simply do not have the resources to keep up (at any given time, there are thousands of suites offered for rent on Air BnB alone) and are supposedly working towards tighter restrictions that would make it easier for them to “crack down” on suites conducting short-term rentals.  This will likely require the cooperation of these platforms, as for the reasons noted above it is exceedingly difficult for the City (let alone a Strata Corporation) to prove definitively when a short-term rental is occurring without expending significant sums of money and allocating valuable resources.

Unfortunately, the framework of the Strata Property Act is not necessarily very well suited to tackling this issue.  As we’ve noted in previous articles,  the Act lays out a very specific process before a fine can be issued.  Fines are essentially the only recourse for a Strata Corporation struggling with this problem (though as pointed out above, some Strata Corporations are towing vehicles and/or disabling fobs, but each strategy has it’s own downsides and should be initiated after obtaining legal advice) and it is administratively difficult for a Strata to keep up.  Each separate night of a rental to a different person might count as a separate complaint, and so you may end up with 15 letters in a month (assuming consecutive 2 night stays) to a single suite, each of which calls for the opportunity for a response and a hearing before issuing fines.  We are finding Strata Councils exhausted and essentially throwing their hands up in the air, and it is hard to blame them given that this issue dominates a number of meeting agendas that have other important items on them.

Perhaps the best tool available to individuals who are concerned about Air BnB and the like would be to write to their various civic governments expressing concern over the lack of action on their part.  It is a difficult and convoluted issue as we hope this article has made clear, and not one that is unique to Strata Corporations.  The more impetus there is for City’s to act, the more likely it is that a coordinate effort will be made at the source rather than the current game of “whack a mole” that is being played in buildings struggling to keep up.