Short term tenancy or single family visitor? Single family use or multiple occupancy? Rooming house or boarding house? Commercial use? Condominium insurance issues?

Many of the issues listed above have been dealt with in a series of cases and were believed to have nailed down home sharing as akin to hotel use and therefore not in accordance with single family use restrictions common in condominium declarations.

As other recent articles on this topic have clarified, a condominium declaration may permit short term tenancy use including homesharing through internet applications such as AirBnB. In such cases, it is extremely difficult to amend the declaration and even if possible, the amendment could lead to oppression remedies by unit purchasers who relied on the provisions. In such cases, an enterprising condominium Board of Directors can negotiate with internet homeshare providers agreements to deal with numerous issues including building security, use of recreational facilities, parking, role of the building concierge, etc.

However, most residential condominium declarations mandate single family use and restrict leasing and commercial use of units.

A recent arbitration decision in Toronto (summer 2018) dealt with the above issues and found that an AirBnB unit use violated the declaration and rules of the condominium.

Unfortunately, arbitration decisions are private, unlike public court documents and judgments, so in the context of this article I cannot identify the parties or the arbitrator. However, since the arbitrator was a retired judge of the Ontario Court of Appeal and the said arbitrator devoted 27 pages to the analysis and award, reviewing the arbitration award is useful to glean how future courts and arbitrators could well handle the above issues.

A number of the findings of the arbitrator are discussed below, where I refer to the case as “CC v. Doe”:


Rule prohibiting use of units as rooming house or boarding house

The corporation in CC v. Doe had a rule that prohibited use of the unit as a rooming or boarding house.

The arbitrator ruled this standard was not clear. According to City of Toronto definitions, the rules dealing with rooming houses and boarding houses refer to multiple rentals of multiple rooms. It was found these definitions were not adequately clear that a single homeshare use could be so defined.

Accordingly, condominiums intending to rely on a rule prohibition would be well advised to consult with their legal counsel to ensure clearer definition of prohibited uses, and not simply “rooming or boarding house” use.


Lease and Short Term Tenancy Restrictions

While this condominium had restrictions against short-term rentals, the arbitrator interpreted them to apply to a lease of the entire unit and accordingly the restrictions were held not applicable to homesharing uses.

Case Law

The arbitrator in CC v. Doe considered five cases including the 2016 case of Ottawa-Carleton Standard Condominium Corporation No. 961 v Douglas Menzies, which ruled that an AirBnB use was a breach of the single family dwelling restriction in the declaration, as well as a breach of the rule preventing leases of less than four months. The arbitrator distinguished this case on the basis that it did not relate to a leasing of a single room therefore it was not applicable to the current situation.

Metropolitan Toronto Condominium Corporation No. 850 v Oikle, which upheld a short term tenancy rule prohibiting occupancy of less than six months, was also referenced and distinguished on the above basis.

The case of Mireille Ballingall et al v Carleton Condominium Corporation No. 111 et al found occupancy of units by unrelated occupants was in violation of the single family restriction in the declaration. The arbitrator distinguished this case on the same basis: no part of the unit was occupied by the owner in that case but in CC v. Doe, only a single room was exclusively occupied by the unrelated, transient occupants who “shared” the rest of the unit with the owner.

The next case considered in CC v. Doe was the 2013 decision in York Condominium Corporation No. 17 v An Ge, which held that by permitting the use of multiple units with two or more tenants occupying illegal bedrooms at any one time, the owner effectively turned the premises into a boarding or rooming house. This case was distinguished on the same basis.

The final case put forward by counsel for the condominium corporation was Elizabeth Anne Chan v Toronto Standard Condominium Corporation No. 1834 which held in 2011 that renting three rooms to different tenants violated the single family restriction. It was distinguished on the same basis by the arbitrator.


Rule prohibiting Commercial Activity or Business

The condominium in CC v. Doe had a rule prohibiting commercial activity in the residential units. The arbitrator found that an AirBnb operation was “certainly” a commercial activity and/or a business. The arbitrator held that AirBnB use “has the usual attributes of both terms. It involves the provision of a service to the public for a fee which is at the crux of a commercial activity.”

By this finding, the arbitrator ruled that the owner was required to discontinue the AirBnB use.


Insurance Issues

As is common in condominium declarations, there is a prohibition of use of units that may result in cancellation of the corporation’s insurance policy or an increase in the corporation’s premiums. In CC v. Doe, the arbitrator found that a letter from the corporation’s insurance broker advising that disclosure of this use to the corporation’s insurer could well result in cancellation of the policy was good evidence of a breach of this prohibition.


Conclusion

In the end result the condominium corporation obtained its arbitration award prohibiting AirBnB and similar homesharing apps or uses, and is currently awaiting the arbitrator’s award relating to costs of the arbitration.

However, this arbitration award makes it clear that all aspects of such a use and of the corporation documentation will be carefully analyzed before an award or judgment is given. Concerned condominium boards of directors should be proactive in ensuring clearly worded rules avoid generic terminology such as “rooming house use” or “boarding house use” so that restrictions or prohibitions clearly apply to the homesharing use.

Prepared by John Deacon

© Deacon, Spears, Fedson + Montizambert, 2018. All rights reserved.

 

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