Short-Term Rentals of Condominiums
This article first appeared in French in the Winter 2017 edition of the Copropriété Plus magazine.
With the increase of online platforms promoting and facilitating short-term accommodation rentals, such as Airbnb, VRBO, HomeAway and several others, there has been a surge of lawsuits, judgments, articles and myths surrounding the horrors experienced by some lessors (and their neighbours) in connection with short-term rentals. All of this should prompt condominium owners and their co-ownership syndicates to seriously consider the potential impacts of short-term rental of their units and the pertinence of preventive or control measures.
As one can see from the case law in this regard, the short-term rental of condominium units can lead to many inconveniences and major neighbourhood disturbances. In fact, the various co-owners in a condominium building are not only neighbours; they share a number of common spaces. Accounts of parties lasting long into the wee hours and raucous behaviour by short-term tenants soiling and causing damage to the rented units and common spaces are many. In addition, while not as extreme, an increased number of people frequenting the building and using the common spaces such as swimming pools and rooftop terraces can greatly perturb the residents of an otherwise peaceful condominium complex.
In order to avoid such problems, condominium owners should agree and determine if the building’s bylaws need to be modified to prohibit or better regulate short-term rentals of units in their building. They should also consider the advisability of adding a penalty provision to the bylaws in order to discourage potential contraventions by any of the co-owners.
With respect to amending the building’s bylaws, the Civil Code of Québec provides that no restrictions may be imposed on the rights of the co-owners “except restrictions justified by the destination, characteristics or location of the immovable”1. It is thus important in such contexts to verify the property’s destination, as specified in the declaration of co-ownership, and take into account its location and characteristics, before amending the building’s bylaws to restrict or prohibit short-term rentals.
However, if the co-owners are in favour of short-term rentals, they must firstly ensure that the municipal zoning bylaw allows this practice. The co-ownership syndicate should also verify with the building’s insurer as to whether the insurance on the building covers the risks associated with short-term rentals of individual units, as well as the potential impact on the amount of the premium of such practice, the whole before declaring that short-term rental of units is now authorized in the building.
The co-ownership syndicate must also ensure that the co-owners renting their units on a short-term basis respect their obligation to notify the syndicate when they rent out their private portion, as required by the Civil Code of Québec2.
It should also be noted that section 1 of the Regulation respecting tourist accommodation establishments3 provides that “[a]ny establishment in which at least 1 accommodation unit is offered for rent to tourists, in return for payment, for a period not exceeding 31 days, on a regular basis in the same calendar year and the availability of which is made public, is a tourist accommodation establishment”. (emphasis added)
Thus, a co-owner who rents out one or more condominium units to tourists for a short term on a regular basis via a platform such as Airbnb, or simply through a newspaper ad, is in fact operating a tourist accommodation establishment and is therefore subject to several statutory obligations. These obligations include obtaining a classification certificate, which must be kept conspicuously posted at the main entrance of the establishment, ensuring that the proposed use of the unit complies with the local zoning bylaw, and obtaining civil liability insurance for at least $2,000,000 per claim covering the risks associated with the operation of a tourist accommodation establishment.
Undoubtedly, the majority of the short-term rentals of condominium units do not comply with the above-mentioned legislative requirements and therefore expose lessors to significant fines4.
1 Civil Code of Québec, (CQLR, c. CCQ-1991), article 1056
2 Civil Code of Québec, (CQLR, c. CCQ-1991), article 1065
3 CQLR, c. E-14.2, r. 1
4 Act respecting Tourist Accommodation Establishments (CQLR, c. E-14.2), sections 36.1 and following