Can an Ontario Condo Ban Short-Term Rentals Like Airbnb?

Short-term rentals through platforms like Airbnb can be profitable, but they can also lead to disputes in a shared building. If you own or are thinking of buying a condo, you may wonder whether the corporation can stop you.

There is no single answer for every Ontario building. This article explains how the governing documents fit together, how they can be changed, and the kinds of consequences owners can face. The exact wording of your declaration and by-laws is what decides the question.

Start with your governing documents

Whether short-term rentals are allowed in your building depends first on what your corporation's documents say. Ontario condos are governed in this order: the Condo Act, then the declaration, then the by-laws, then the rules. If they conflict, the Act takes priority.

Look for wording about how units may be used, whether they may be leased, and how long an occupancy must be. Wording differs from one building to the next, and what a clause means for a short stay can be a legal question.

How restrictions can be added or changed

If your documents are silent on short-term rentals, a corporation may try to add restrictions. The route matters because each carries a different approval threshold.

• Declaration: amending it needs written consent from 80 to 90 per cent of owners, depending on the change.
• By-laws: the board passes a change, then owners vote on it at a meeting, where most changes need majority approval. Approved by-laws are registered in the Land Registry Office.
• Rules: the board can make or change rules after notifying owners. A rule takes effect unless owners request a meeting to challenge it before its effective date.

Rules may promote safety, security and welfare, or prevent unreasonable interference with the use and enjoyment of units and common areas. Noise, constant turnover of strangers and security concerns are the kinds of issues boards often point to, but whether a particular restriction is valid depends on the documents and the facts.

What consequences can owners face?

The consequences depend on what your documents provide and what actually happens. Several tools are available to a corporation.

• Chargebacks: a chargeback is a cost the corporation bills to one owner, usually because of that owner's act or omission. If an owner cannot pay chargebacks added to their condo fees and no solution is reached, the corporation automatically has a lien against the unit for that debt.
• Damage by an owner, tenant or resident: the corporation can charge the owner the lesser of the repair cost or the corporation's insurance deductible. Whether a short-term guest counts as a resident depends on the facts, so it is worth confirming with a lawyer.
• Liens: if an owner defaults on common expenses, the corporation automatically has a lien covering the unpaid amount, interest and all reasonable legal costs and collection expenses.
• Tribunal disputes: issues such as nuisance (noise, smoke, odour), parking, storage and pets fall within the Condominium Authority Tribunal's jurisdiction.

How any of this applies to a short-term rental depends on your documents and the specific events, so it is worth confirming with a lawyer. If a lien is registered, an owner can pay everything the lien secures at any point until the unit is sold, and the corporation must then discharge the lien.

Insurance and guests

Hosting guests raises insurance questions. The corporation's property insurance does not cover improvements or non-standard elements of units, and fixtures, furnishings, equipment and personal property are generally not part of a standard unit, which each corporation defines in its governing documents.

Some corporations have by-laws that make owners pay the corporation's deductible in more situations, including where no one is directly at fault, and deductibles can range from a few hundred dollars to tens of thousands. A corporation's declaration, by-laws or rules may also require owners to carry insurance, and then it is mandatory for that building.

Tenants are not legally required to carry tenant insurance unless the tenancy agreement or the corporation's governing documents require it. Whether your own policy covers rental use is a question for your insurer.

What to do next

• Get the current declaration, by-laws and rules before you buy or list a unit.
• Read the use and leasing provisions and note any recent amendments.
• Ask the board or management whether any rule changes are being considered.
• Talk to your insurer about rental use and deductible coverage.
• Speak with a lawyer before you list the unit if the wording is unclear.
• If you receive a notice or charge, respond promptly and keep your fees up to date.

Frequently asked questions