Renting on AirBnB? Things to Think About

I watched a webcast today of a series of lectures on the law and temporary accommodation rental – renting through AirBnB and similar companies.  It is clear that with the advent of social media and the explosion in “online” business, that non-traditional methods of making money have grown.  Whether it is Uber for transportation or AirBnB for accomodation, times are changing – but that doesn’t mean that the law has changed.  And that was the topic of the lectures given on the webcast.

I should say at the outset that I use AirBnB all the time when I am travelling and I think it’s a great idea and I have had nothing but good things to say about the company.  I should also mention that AirBnB isn’t the only company doing this type of business, but I will mention it’s name only because it’s the name most people have heard of.

If you are thinking about renting out property through AirBnB or a similar service, then some of the things you should think about (as mentioned in the lectures) are:

1. Are you renting your place?  If so, then you may have problems with either the landlord or the other tenants in the building or with the authorities.  Examples include:

  • your lease could prohibit running a “commercial” venture in your residential apartment
  • subsection 134(3)(a) of the Residential Tenancies Act prohibits a tenant from subleasing a unit to a subtenant (and a temporary rental to a traveller would in most instances count as a subtenancy) for an amount greater than the rent which the tenant is paying.  So, if you are renting and paying rent to your landlord for $900 a month, for example, and in that month there are 30 days, then you are paying $30 a day in rent.  If you rent out your apartment through AirBnB or a similar service for, say, $40 a day, then you are in contravention of ss. 134(3)(a) of the Act.  This can mean, in accordance with paragraph 234(l) of the Act, that you can be charged with an offence and subject to a fine of up to $25,000 (as provided in section 238 of the Act)
  • if your “commercial” activity is discovered, the landlord could have reason to evict you simply because of this fact – even if you are not disturbing anyone
  • the landlord could also evict you if it turns out that your “guests” through AirBnB either cause damage to the property or disturb the other tenants

2. If you do not rent but you own your apartment, is it in a condominium?  If it is, then you could have problems with:

  • a term of the condominium declaration that restricts your ability to carry on this activity.  For example, the declaration could say that owners are only to use their units for single-family residential dwellings, or it might say that no commercial activities are permitted.
  • a term of the condominium’s by-laws
  • a term of the condominium’s rules

3. If you own your apartment, whether it is in a condominium or not, you could also have problems with:

  • existing zoning by-laws – for example, your house may be in a zoned residential area that does not permit commercial activities
  • existing licensing by-laws – you may be required to have a valid licence to carry on business and the failure to do so breaches the by-law
  • existing property standard by-laws

Now, when it comes to by-laws, lots of people think “well, as long as the City doesn’t know about it, I’m fine” or “what the heck, the City’s not going to do anything about this, they have bigger problems to deal with than my renting to some travellers from time to time.”  That may well be true, but Section 440 of the Ontario Municipal Act allows any taxpayer to bring an application to stop the breach of the by-law.  So, even if the City doesn’t do anything, your neighbour or neighbours who aren’t happy that there’s a parade of travellers going to and from your apartment or home and making noise, etc. can sue you for breach of the applicable by-law.

4. Will your insurance cover the situation?  Many “home” insurance policies cover only damage resulting from residential activities.  More importantly, many policies will expressly say that the insurance does not cover commercial activities.  If Mr. X is at your place because he has paid you to stay there, and then he damages something, there is a good chance that your insurer could deny coverage.  It’s probably not a big deal if Mr. X damages your couch.  It’s something completely different if Mr. X leaves the bathtub running and floods your place and the 3 neighbouring apartments immediately below you – that’s when you don’t want to hear that your insurance policy doesn’t cover the situation.

So, while it may be a good idea to make some money through renting your place out from time to time with services like AirBnB, it is also something that you should look into more closely to ensure that the money you make on the side doesn’t cost you more in the end than you expected.

Something to think about.

CALC

 

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