Airbnb hits legal snag in Ontario following Ottawa condo court case

Condo owners across the province could find it more difficult to rent out their units for short periods using services such as Airbnb following a landmark court ruling involving an Ottawa condominium corporation.

A local Ontario Superior Court judge found that Airbnb operators were essentially running a business out of their residential dwellings in contradiction of the framework of rules set up in most condominiums. The ruling may prevent condo owners in the province from listing their units on Airbnb or other short-term rental services.

It’s a setback for the rapidly growing online service, which allows homeowners to rent out their apartments and houses to guests for short-term stays. While the service is still a popular alternative for many travellers, critics have increasingly been taking aim at the service over its impact on neighbouring residents, housing prices and traditional hotels.

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Rodrigue Escayola, an Ottawa-based lawyer and partner at Gowlings WLG, represented the condo corporation at 170 Metcalfe St. in the case. Mr. Escayola, who also sits on the condo board of his own building, says he has seen concerns about Airbnb hosting rise in recent years. Condo owners worry about having a rotating cast of neighbours, as well as strangers having access to the common elements of the building such as gyms and laundry.

“I see the sensitivity around that in my own condo corp … Airbnb systematically comes up as an issue,” Mr. Escayola says. “They have a direct impact on the community.”

From the corporation’s point of view, there are also liability risks if an Airbnb guest were to become injured in the condo’s common spaces. If a guest hurts themselves in the gym, for example, it’s the condo corporation – not the condo owner or Airbnb – who gets sued.

In a statement, Airbnb responded to the ruling by saying it would continue to work with condo boards and other organizations to support “healthy home-sharing communities.”

“We look forward to continuing a productive dialogue with policy makers across Canada and to providing insight into the makeup of our community – the vast majority of whom are regular people sharing their primary residences – to develop fair, easy-to-follow home sharing regulations. Airbnb believes in the right of everyday people to share their homes on an occasional basis,” said spokesperson Christopher Nulty.

The company went on to note there were 50,000 hosts across Canada using the service, some of which rely on Airbnb as a source of income.

Locally, Ottawa hotels have also lobbied recently for further regulation of the sharing economy competitor in the form of licensing for Airbnb landlords, though city officials told OBJ last month that they were not currently looking into these regulation options.

Calling a cat a cat:

Key to this ruling was the reference to “single-family dwelling” units, which Justice Robert Beaudoin determined was inconsistent with the activities of hosts from Airbnb and other similar short-term leasing services who run their condos like a business.

“The fact that you have a revolving door of ‘single families’ isn’t compatible with ‘single-family dwellings,’” says Mr. Escayola.

In his ruling, released late last week, the judge found the nature of Airbnb – with check-in and out times as well as provision of fresh towels, linens and other amenities – was not in the spirit of the condo’s residential classification.

“That is a business. He basically called a cat a cat,” Mr. Escayola says.

The “single-family dwelling” classification is common to condo declarations across the province, making this ruling a significant victory for hoteliers and condo corporations who have been fighting Airbnb’s disruption in the market.

In response to the surging popularity of Airbnb and other short-term leasing services, condo corporations have taken steps to limit these activities from their tenants by amending their corporations’ “house rules.”

Specifically, some condo corporations have begun to institute rules that require a three-month minimum for short-term leases in order to discourage owners of units from becoming Airbnb operators, while still allowing individuals to lease their property to snowbirds and other individuals looking for short-term arrangements.

The response from Airbnb operators to this strategy, Mr. Escayola says, has been to ask to be grandfathered into these rules that were not in place when they first moved into the building.

Conversely, this new ruling draws on the pre-established condo declaration, leaving such arguments with less substance.

Mr. Escayola says this ruling doesn’t necessarily preclude condo developers from welcoming Airbnb if they so choose. He says he has seen new builds that allow for the “transient use” of dwellings, making the property more appealing to prospective owners interested in buying a unit for short-term rentals.

However, he says this approach concerns him as not every buyer will move into the building with full knowledge of the implications of such provisions.

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