Revolving door to your condo building?

Revolving Door

How Airbnb and short term leasing affects your condo living

Your condo unit is your home, so you should be able to do whatever you want with it (that’s legal, of course), right? Not so fast.

Part of the role of your condo board is to ensure the security and safety for all residents within the building (both unit owners and long-term renters). Unfortunately with short-term stay companies, such as AirBNB and Homeaway, there becomes a heightened security risk that governing bodies and laws, such as the Condominium Property Act, are trying to catch up with. What’s worse is that each provincial and municipal governing body do not have consistent laws with this type of rental in a communal residential, not commercial, property.

What is a Short-Term Rental?

The long and the short (haha) of it is a short-term rental is where you rent out your place for a day, weeks, or a couple months at a time, typically less than six months. Here, you typically don’t conduct a background check on the individual who will be staying at your property.

Companies, such as AirBNB, have made it easy to connect renters with properties for rent, benefitting both the property owner (the host) and the renting individual.

As the host, you:

  • Have someone in your empty property
  • Have an additional source of revenue

For the renter, they:

  • Have a place to stay without having to stay in a hotel or hostel
  • Get to enjoy the benefits of staying in a home
  • Are typically able to travel on a smaller budget than if staying in a hotel

Sounds great, right? So, what’s the issue and why are some condo boards not approving of residents taking advantage of AirBNB services?

Safety First

Part of your condo fees and condo living experience involve a certain level of security within the building. Residents expect to know who lives in the building, the basic coming and going of schedules, and for other residents to have the same level of care about the overall building as other owners. By opening up your individual condo unit to travellers, you remove this “in the know” and common day-to-day activities that condo buildings typically have.

By becoming a host, you’re increasing the safety risks not just of your unit, but your entire building because:

  • You don’t know the history of the individual(s) renting your space
  • The guest most likely won’t have the same concern for your building as actual residents of the building
  • The guest won’t know the rules of your condo building
  • The guest may not be the only person in your home if they choose to have people over.

Not only that, but we’ve all heard stories about where guests trash the place they’ve rented. Can you imagine if you discovered that your condo was ruined or worse, someone was actually hurt, in your condo? While renting may seem like a great idea, the truth of the matter is you don’t know who will be staying in your place. And, with respect to the rest of your condo community, it’s disconcerting not knowing who is coming in to the building…particularly if they have not had a background check on them.

Difference between a rental and a hotel

This further leads to the issue of what your condo actually is…and it is not a hotel. Hotels are equipped to handle strangers coming and going at all hours of the dayand night. They have security systems in place, proper lock down procedures if required, security deposits taken via credit card, and the proper insurance that a commercial business must legally have. Your condo building has systems in place for residents, not travellers, and these systems are not the same as a hotel’s.

Insurance Coverage

With services like AirBNB, you are opening your home up, offering a place to stay, eat, and all the other fun that comes with having a place to rest one’s head. BUT, you are also essentially running a tiny business right from your home. A tiny business that doesn’t have commercial insurance since most homeowner / renter’s insurance policies do not cover commercial activity, such as renting out your property for short-term periods.

And while AirBNB does offer Host Protection Insurance, this is only to be utilized should your actual homeowner’s policy reject your claims. AND it may not cover damage that occurs to the common areas of your building.

We’re not trying to demonizeAirBNB. They’ve truly transformed the travel industry for the better and, when “Renters Gone Bad” happens, they do respond and often cover the damage caused. However, they are not the condo owner and, therefore, do not have the same responsibilities that you do to the rest of the residents in your building.

Noise Pollution

In a hotel, you expect to hear people outside your door. Sometimes, you even expect to hear a party or screaming children. But, you also are able to call down to the front desk and complain. In a condo building, your neighbours don’t have this same luxury. They expect to be able to enjoy peace and quiet in their own home, without having to worry about the noise or strange foot traffic going past their door.

Zoning

Business zoning issues may come into play as well as your condo building may not be zoned as a building for commercial activity. A hotel will have the proper permits in place, the proper business licences, and pay the proper taxes to conduct tourism affairs, everything required for successfully running guest services. Your condo building won’t and, therefore, may be subject to fines if it’s discovered that a business is being incorrectly run without the proper zoning.

What is the law?

Currently in Alberta there isn’t anything in the Condominium Property Act that prohibits condo owners from renting their unit. After all, policy is often catching up to the innovations with technology and social interaction.

That said your condo corporation does have the right to rewrite specific bylaw or rules to limit condo owners from the type of rentals offered (e.g. only long term tenants so long as they’ve been approved by the board).

While AirBNB does provide insight into specific U.S. City Regulations, there isn’t anything like this for Canadian cities. And, there isn’t consistency across Canada with the laws. For instance in December 2016, Ontario passed a law that allows condominium corporations to ban unit owners from renting out their individual units through short-term rental services. This means that, depending on the province you’re condo is in you may or may not be able to rent. Confusing and still being sorted out, the responsibility falls on your individual condo board, along with you, to ensure the safety and overall health of your condo building.

What can your board do?

While you may want to rent through a short-term stay service, you may not be able to. Again, your condo board’s concern should be for the overall safety and security of your entire building. Meaning, your board can pass a rule for your condo that limits the type of rental residents are allowed to offer with their unit.

We are not saying there’s no place for AirBNB. Really, we are big fans of using technology to connect the world and transform industries (it’s what we’re doing with our own condo management services). However, when living in a shared space, you have a responsibility not just to your personal property, but also to those who share space with you.

And while your condo unit is your property and you should be able to do with it as you please (again…legally!), you are still responsible for abiding by condo rules.

Still looking to be an AirBNB host?

If you are still want to rent your condo unit out through AirBNB or other short-term stay site, before registering as a host, we recommend:

  • Reviewing your own homeowner’s insurance policy to ensure that you have proper coverage for your property, including liability and property protection,
  • Reviewing your condo’s policy, identifying key terms, such as “single family use” or “residential purposes” only
  • Speaking with your condo board about what their stance is on this type of renting
  • Understanding that if there is any damage to the common property, you may be responsible for covering the costs of repair.

Decide if this is a situation where you want to act first, and (potentially) ask for forgiveness later.

Clearly, this is an on going topic that will change as laws catch up to the issues that are front and centre for condo corporations with the changing landscape of tourism. To stay on top of these changes, join the conversation at Alberta Condo Owners for Change, or contact Catalyst to chat.

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