With the rise in popularity of short-term rentals, such as Airbnb or VRBO, a condominium’s ability to restrict such rentals has become a hot topic. Last October we posted an article [“Court Rules Condo Board Can Limit Air BnB Rentals… For Now”] about a condominium that successfully secured an interim junction to ban short term rentals under their Bylaws. A full hearing on the matter was heard on February 21, 2020, a summary of which follows.
As a brief summary of the facts, the dispute in Kuzio arose when it came to the Condominium Board’s attention that owners were renting their units on various short-term rental sites such as Airbnb and HomeAway.ca. The Board informed the owners that short-term renting of their units violated the Condominium’s Bylaws and instructed them to stop the rentals. At an interim hearing in October 2019 the court implemented a temporary ban on short-term rentals in the Condominium until the matter could be argued in full.
In a written decision published February 27, 2020, Condominium Corporation No 042 5177 v Kuzio, 2020 ABQB 152 (“Kuzio”), Justice Belzil upheld the previous court’s injunction and confirmed that Condominium Bylaws, if properly drafted, can prohibit short-term rentals.
Upon argument, the court found that Section 32(5) of the Condominium Property Act (”CPA”) acts to prohibit bylaws that restrict the leasing of units. However, short-term renters do not acquire an interest in property as they are not actually “leasing” the unit. Instead they merely gain a license to occupy similar to hotel guests. As such, Bylaws that act to prevent short-term rentals do not fall within the scope of section 32(5) of the CPA.
The court went on to state that buying a condominium unit is not the same as buying a freestanding house in fee simple. Rather, life in a condominium reflects a “balancing act” whereby owners’ interests are restricted to a certain extent by the condominium under the purview of the CPA. The court determined that reading the CPA in a way that prevents condo boards from restricting short-term rentals would fundamentally change the character of the condominium regime and adversely affect the majority of other unit owners, without their consent.
While the renting owners tried to argue the individuals renting their units were tenants, the court determined that this was not the case. Since “Tenant” is not defined in the CPA or the Bylaws, the court defined it as someone who is “domiciled” in a unit for a period of time. In other words, a residence where they store the bulk of their clothing, keep important documents, prepare meals and otherwise “habitually reside”. As this is not the case for short-term renters, they cannot be considered tenants.
The Bylaws in the case at hand only allowed units to be utilized for single family use by owners, tenants or their friends and family, and prohibited a unit’s use for any commercial use without the board’s approval. The court found that short-term rentals were clearly a commercial use as they generate income. Therefore, the Bylaws were sufficient to prevent short-term rental arrangements.
In brief, short-term renters who occupy a space where no lease is entered into are akin to hotel guests who occupy a unit as licensees in exchange for consideration. Condominiums are permitted to control and prevent such licensees, however, to do so the Bylaws must be tailored to address this.
For further information on amending Bylaws to reflect these recent changes, or for assistance in dealing with short-term rental issues, please contact John McDougall, Dionne Levesque or Kate Kozowyk.