Short-term rentals can be a very contentious issue within condo communities. Some owners are thrilled about the idea of renting out their units for a weekend to make a little extra cash, while others hate the idea of having strangers constantly coming in and out of their building.
It is true that guests usually don’t have a stake in the condo, and therefore, may be less likely to establish good relationships with the neighbours or maintain the condition of the property. However, buildings have also had good experiences with short-term renters.
Regardless of your opinions of the issue, an owner or resident’s ability to use their condo for short-term rentals will usually depend on the condo corporation’s documents, including the declaration, bylaws, and rules.
A condo corporation may have the power to prohibit short-term rentals
Depending on where you live, short-term rentals of less than 30 days may simply not be allowed. Some cities have an outright ban on short-term rentals, while others do not allow units to be rented out for “transient commercial occupancy” if the building is located in a specific area. You may also be required to obtain a permit or business licence. Some cities require you to obtain both a business licence and a renewable short-term rental permit, and others even limit the number of permits they issue.
Let’s say there are no city rules that ban short-term rentals in your area. You still need to check with your condo corporation’s documents. They may prohibit rental or tenancy agreements for a period shorter than six months, or they may contain strict policies about short-term rentals. Many condo acts do give condo corporations the right to ban short-term rentals, and if this is the case, boards and property managers need to communicate short-term rental rules (and restrictions) to their residents.
Make the rules clear
Your community needs to know what is and what is not allowed when it comes to short-term rentals. The rules should be available to all residents. It may be helpful to post governing documents on the password-protected section of your condo’s website, or save them to an online File Library.
If short-term rentals aren’t addressed in the governing documents, or if the language regarding this subject is unclear, you should raise the issue at your next board meeting to discuss possible changes. Ambiguity can lead to misunderstandings and frustration. Keep in mind that changing governing documents requires the support from the majority of owners, so the board or property manager will have to be vigilant about encouraging owners to vote if the rules are going to be amended.
If you’re having trouble developing or enforcing rules pertaining to short-term rentals, it is recommended that you consult with an attorney for further guidance.
If short-term rentals are permitted
Educate your residents about best practices, rules and limitations. Use a variety of communication channels, including email, special meetings, newsletters and posters, to remind residents about the building’s short-term rental rules, and the consequences of operating illegal short-term rentals.
Use software to authorize and manage guests. Security or concierge can keep track of when guests arrive, and when they leave, with Condo Control Central’s online Authorization Entry feature. Residents have the ability to leave specific instructions for security or concierge regarding the guest, length of stay, special requirements, etc., through their CCC account. When the guest arrives, they check in with the front desk, concierge inspects their ID, verifies that the unit owner has given that individual permission to stay in their home, and signs the guest in.
If a resident is away but is expecting a family member, friend or another visitor, they can authorize entry ahead of time. Residents are also able to revoke access to someone who they have previously given access to.
The Authorization Entry feature also has a section for the security guard to enter a brief description of the guest who is staying in the unit, along with their identification information. They can log when the guest arrived, and when they checked out. This helps in situations where a guard needs to troubleshoot an issue or use the authorization record as a reference.
In addition to using this software, condo buildings may want to:
- Require residents to obtain and provide written proof of insurance coverage for short-term rentals
- Prohibit guests from using any of the facilities or amenities in the condo building. For this to work, residents would need to purchase a special short-term renter key fob, and let the renter know that they do not have access to the building amenities
- Consider other rules
Encourage transparency and honestly if short-term rentals are permitted. Most residents will be happy to follow the rules, and won’t mind taking a few extra steps to ensure greater security and accountability.
If short-term rentals are not permitted
If short-term rentals are not permitted, make this clear to your residents. Explain why this rule was put in place, and let them know what may happen if the rule is broken.
Board members or property managers may want to periodically check sites like Airbnb, VRBO, and HomeAway to see if anyone in your community has listed their unit. If you do find someone who is ignoring the rule, management should notify the owner(s), and take the appropriate actions to stop the violation from occurring again.
If a resident is going against condo rules and renting out their unit to short-term guests, they should be issued a violation notice. If it’s the first time they are being notified about the offence, it is acceptable to issue a warning letter. However, repeat offenders should be served a formal violation notice, and possibly a fine.
Each building will have its own fine schedule, but they can be as much as $500 each night the rental rule is broken. There may be limits on how much you can ask a resident to pay for the same violation, so check your governing documents before you begin issuing fines.
If fines still don’t discourage a resident from renting out their unit to short-term guests, mediation might be the next step. Mediation is a process where a neutral facilitator tries to bring parties, in this case, the resident and the corporation, to a mutually agreeable solution. Mediation is usually preferable to litigation because it’s less costly, and it allows the parties to find a solution that they can all live with.
If mediation fails, binding arbitration is the next step. Arbitration is more formal, and arguably, less flexible than mediation. It is a process where an arbitrator conducts a hearing and makes a ruling based on the issues presented by the parties. The arbitrator makes a binding decision, meaning the parties are legally obligated to follow the decision that was made by the arbitrator. If the resident continues with illegal rentals, litigation may be necessary.
Short-term rentals can be problematic, but if there is some sort of system for residents and renters to follow, these arrangements can work well. Most guests will be courteous and respectful of the people living in the units next to them. The key is to make rules clear, and address issues early on.