Recent Decision Addresses Short-term Rentals

A recent Ottawa court decision provides helpful confirmation of the existing law respecting the rights of condominium corporations to prevent short-term tenancies.

In the case of Ottawa-Carleton Standard Condominium Corporation No. 961 v. Menzies – which we will cite as OCSCC 961 – the Court held that an owner’s short-term rentals, arranged through “numerous websites such as Airbnb”, violate the corporation’s Declaration and Rules.

The corporation’s Declaration states that the units can be used only as single family dwellings. The Court said:

“Single family use” cannot be interpreted to include one’s operation of a hotel-like business, with units being offered to complete strangers on the internet, on a repeated basis, for durations as short as a single night. Single family use is incompatible with the concepts of “check in” and “check out” times, “cancellation policies”, “security deposits”, “cleaning fees”, instructions on what to do with dirty towels/sheets and it does not operate on credit card payments.

 Moreover “Single family use” could not have contemplated including the use of a unit to house out-of-town witnesses and experts for trial preparation or the unit being offered on silent auctions for not-for-profit organizations or to hold a law firm’s office functions and Christmas parties. What has happened in this case is a commercial use of the unit.

 The corporation also passed a Rule placing a four-month minimum on the duration of tenancies. The Court said that “rules requiring that leases be in excess of 4 months have been found to be valid and enforceable.”

So, in summary, this is another helpful decision that serves to reinforce previous cases upholding similar provisions in condominium Declarations and Rules.

Another note that I hasten to add is as follows: the courts have previously upheld Rules prohibiting short-term tenancies even in cases where the Declaration doesn’t contain any “single family” provision, but rather says that the units can only be used for “residential purposes”. In my view, some of the reasoning in the OCSCC 961 decision (for instance, the reference to “commercial use”) might also be helpful in those situations. Anyway, my point is that even if your Declaration doesn’t include a “single family” provision, you might still be able to pass and enforce a Rule against short-term tenancies. This is something that may depend upon the specific wording of the Declaration in each case.

The OCSCC 961 decision also contains some other interesting findings. For instance:

• The Court said: “In the absence of a definition in the condominium documents of what constitutes a ‘single family’, the courts have defined a ‘family’ as a ‘social unit consisting of parent(s) and their children, whether natural or adopted, and includes other relatives if living with the primary group’”. So this is another reminder that condominium corporations with “single family” provisions in their Declarations should consider establishing a definition of family, perhaps by Rule. Otherwise, the above definition from the courts – which is an extremely narrow definition – may apply!

• The Court also confirmed, as has been held in previous cases, that mandatory mediation and arbitration (under Section 132 of the Condominium Act, 1998) does not apply when the dispute involves any parties other than the condominium corporation and the owner. In this case, the owner had incorporated a company to manage and lease the unit; and the Court held that this company was a necessary party to the dispute. The Court also held that the owner had waived any rights to mandatory mediation and arbitration because the owner’s management company had commenced a Court Application (respecting essentially the same issues) against the condominium corporation – even though that Application had since been abandoned.

This is yet another strong decision in support of condominium corporations looking to prohibit short-term tenancies.

For more information about short term tenancies in condominiums, please get in touch with us.