Understanding Short Term Rentals in Strata Corporations
Short term rentals like Airbnb pose challenges for strata corporations, impacting turnover, security, and community cohesion. Companies such as High Street Accommodations offer furnished units for extended stays. Regulations in Vancouver restrict the use of dwelling units for periods less than a month. The distinction between hotels and bed and breakfast accommodations is crucial in this context.
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Air BnB in Strata Corporations Presented by Veronica P. Franco October 13, 2016
Air BnB www.airbnb.ca - allows travellers to find accommodations designed for people who want to travel cheaply and meet locals from the places they are travelling to. Like TripAdvisor it allows tourists to rate and comment on the places they stay. It also lets the hosts rate the guests, so in theory, it can give hosts some comfort. Rent entire units or just rooms or shared rooms 2
What are we talking about? Short Term Rentals! Many shapes and sizes: Craigslist Air Bnb, VRBO (Vacation Rental By Owner) accommodation website Companies that rent out furnished units such as High Street Accommodations, Premiere Suites and Corporate Stays 3
Companies High Street Accommodations: hospitality management company offer furnished apartment strata lots and townhomes Corporate housing Extended vacation rental Temporary relocations because of insurance claims Used to offer nightly and weekly rates Website says better suited to extended vacations 4
Why do strata corporations care? Frequent turnover Who is using the facilities? Security keeping track of FOBs and keys Impact on community; Increase wear and tear? Insurance strata corporation, owner s insurance Many councils fear these short term rentals even more than traditional rentals. 5
Permitted Use? City of Vancouver Zoning and Development Bylaw Section 10.21.6 No person shall use or permit to be used any dwelling unit for a period of less than one month unless such unit forms part of a hotel or is used for bed and breakfast accommodation. Dwelling unit = self-contained housekeeping unit 6
Permitted Use? Hotel = premises providing temporary accommodation by way of furnished sleeping, housekeeping or dwelling units, but does not include Bed and Breakfast Accommodation Bed and Breakfast Accommodation = the use of one or two bedrooms in a dwelling unit as temporary accommodation where the room rate includes breakfast provided on the premises 7
Permitted Use? Section 10.20.5 No person shall use or permit to be used any housekeeping unit for a period of less than one month unless such unit forms part of a hotel. Housekeeping Unit = a sleeping unit containing facilities for cooking; Sleeping Unit = one or more rooms equipped to be used for sleeping and sitting purposes; 8
Municipal Bylaw Enforcement In June 2016, 5,353 units listed across multiple platforms. 85% of units are listed on AirBnb, 8% on Homeaway websites (VRBO), 4% on Flipkey (Tripadvisor). 74% were listed as entire units, only 3% were licensed under COV bylaws. Until 2016, no real or significant enforcement. 9
City of Vancouver Study Impacts of Short-Term Rentals: 1. Lucrative business there is incentive to rent short- term rather than a traditional rental 2. In June 2016, short term rentals reduced traditional rental stock by about 1,000 units; 3. Short term rentals allow tourists to visit despite fully booked hotels; 4. Short term rental income is being used to cover housing costs 10
City of Vancouver Moving Forward Grant licences to allow owner/tenants to do short - term rentals of their principle residences (i.e. rent part of unit or while owner/tenant is away) license # to be posted in the rental advertisement Short term rentals of investment properties will remain illegal Taxing (GST/PST and Municipal and Regional District Tax) not required yet. The use of the property for short-term rental must not violate strata bylaws 11
City of Vancouver Implementation Must prove principle residence (eg. Title search and utility bill or valid government ID with address) Step up enforcement with help from websites (by requiring license # field) with high penalties and swift legal action If Council adopts recommendations, next steps include taxing revenue, additional regulations, 12
Permitted Use at the Strata Corporation Level Bylaws: Standard Bylaw 3(1) An owner, tenant, occupant or visitor must not use a strata lot in a way that is (d) illegal; or (e) Contrary to a purpose for which the strata lot or common property is intended as shown expressly or by implication on or by the strata plan 13
Definition of residence (contd) Louis v. Strata Plan LMS 499, 2009 BCCA 54 Residence = a man s abode or continuance in a place While in the context of an age restriction bylaw and section 123(2), the discussion was that there was some degree of permanence rather the transience of a traveller or tourist. 14
Rental Bylaws to Ban Short-Term Rentals? Bylaws: Common rental bylaw (but not standard) The minimum period of time a strata lot must be rented is one month/six months/one year (you pick). 15
Rental bylaws are ineffective to ban short term rentals The Owners, Strata Plan VR 2213 v. Duncan & Owen, 2010 BCPC 123 Owners, Duncan and Owen, rented unit to their company Dunowen Properties Ltd. Dunowen Properties Ltd. then rented the units out. Strata Corporation demanded Form K and move in fees for each new tenant . Dunowen denied tenancy. 16
Rental bylaws are ineffective to ban short term rentals The Owners, Strata Plan VR 2213 v. Duncan & Owen, 2010 BCPC 123 Court said: Not a tenancy! They are occupants not tenants. 17
Common Law definitions Lease = grant of exclusive possession over property. It creates an interest in land License = permission to use or do something on property without having an interest in land and usually revocable at will and not assignable. 18
Options for Strata Corporations Not a rental, what now, is this bad? SPA, s. 121(1)(c) A bylaw is not enforceable to the extent that it prohibits or restricts the right of an owner of a strata lot to freely sell, lease, mortgage or otherwise dispose of the strata lot or an interest in land 19
Options for Strata Corporations SPA, s.141(1) The strata corporation must not screen tenants, establish screening criteria, require the approval of tenants, require the insertion of terms in tenancy agreements, or otherwise restrict the rental of a strata lot except as provided in subsection (2) 20
Options for Strata Corporations SPA, s.141(2) The strata corporation may only restrict the rental of a strata lot by a bylaw that: (a) Prohibits the rental of residential strata lots; (b) Limits one or more of the following: (i) the number or percentage of residential strata lots that may be rented; (ii) the period of time for which residential strata lots may be rented 21
Options for Strata Corporations Create new bylaws What does the strata corporation want to accomplish? Not necessarily a one size fits all solution. 22
Issues to Consider Banning bylaws: Does it suit our community? Downtown versus quiet townhouse complex? What sort of client will it attract? What to ban? all licensing, all short term rentals, Homestays Bed and breakfast Home swaps 23
Issues to Consider Regulation: permit some short term rentals set a minimum length of stay, allow a maximum number in complex, permit only during a specific time of year, Regulate advertising and terms of license agreement 24
Issues to Consider Regulation (cont d): Bylaw to collect occupant information PIPA considerations Regulate number of key fobs allocated cancel old ones Move fees Require Insurance 25
Issues to Consider PIPA (Personal Information Protection Act) 11. personal information only for purposes that a reasonable person would consider appropriate in the circumstances and that Subject to this Act, an organization may collect (a) fulfill the purposes that the organization discloses under section 10 (1), or (b) are otherwise permitted under this Act. 26
Issues to Consider PIPA (Personal Information Protection Act) 10 (1) On or before collecting personal information about an individual from the individual, an organization must disclose to the individual verbally or in writing (a) the purposes for the collection of the information, and (b) on request by the individual, the position name or title and the contact information for an officer or employee of the organization who is able to answer the individual's questions about the collection. 27
Issues to Consider Security and Key Fobs: Require list of key security bylaws that must be left with occupants garage gate closures, reporting to concierge, don t open to strangers, video surveillance and key fobs Regular audits of key fobs to ensure only current occupant and owner/tenant has the rest Limit the number of key fobs 28
Issues to Consider Move Fees: Flat rate of between $100 and $350 is common. No distinction between whether elevator is used or unit is furnished Problem? 29
Issues to Consider Move Fees = user fee SPA, s. 110 A strata corporation must not impose user fees for the use of common property or common assets by owners, tenants or occupants, or their visitors, other than as set out in the regulations. 30
Issues to Consider SPA Regulations, s. 6.9 For the purpose of section 110 of the Act, a strata corporation may impose user fees for the use of common property or common assets only if all of the following requirements are met: (a) The amount of the fee is reasonable; (b) The fee is set out (i) in a bylaw, or (ii) in a rule and the rule has been ratified under section 125(6) of the Act. 31
Issues to Consider The Owners, Strata Plan VR 2213 v. Duncan & Owen, 2010 BCPC 123 Suggests that $75 may be reasonable. 32
Issues to Consider The Owners, Strata Plan LMS 3883 v. De Vuyst, 2011 BCSC 1252 Must be objectively reasonable, so look at: 1. Prevailing market conditions at the time; and/or 2. The costs incurred by the strata corporation in facilitating moves in/out of the property. $200 was unreasonable because of Mr. De Vuyst s evidence of other comparable buildings charging less. 33
Issues to Consider Insurance Change in risk in strata corporation s policy contact broker Change in risk in unit owner s policy YES probably need a commercial policy Consider bylaws requiring strata corporation be a named insured under their commercial operations policy 34
Conclusion Short term rentals are: are generally based on a license agreement. are not rentals so will be treated differently under the SPA. allow for more flexibility in creating bylaws to limit and regulate than traditional rentals. 35
Conclusion Consider whether to ban or regulation? Whether banning or regulating, consider the extent of the ban or regulation? 36
These materials are necessarily of a general nature and do not take into consideration any specific matter, client or fact pattern. Please direct inquiries or comments to: Veronica P. Franco vpf@cwilson.com 604-891-7714 www.cwilson.com THANK YOU
