1. Air BnB in Strata Corporations
Presented by Veronica P. Franco
October 13, 2016

2. 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

3. 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

4. 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

5. 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.

6. Permitted Use?
City of Vancouver – Zoning and Development Bylaw Section 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

7. 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

8. Permitted Use?
Section 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;

9. 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.

10. City of Vancouver Study
Impacts of Short-Term Rentals:
Lucrative business – there is incentive to rent short- term rather than a traditional rental
In June 2016, short term rentals reduced traditional rental stock by about 1,000 units;
Short term rentals allow tourists to visit despite fully booked hotels;
Short term rental income is being used to cover housing costs

11. 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

12. 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,

13. 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
Illegal = contrary to municipal bylaws
Residential versus commercial use – What does residential mean –
Section 1 of the SPA – residential means a strata lot designed or intended to be used primarily as a residence.
Residence is not defined

14. Definition of residence (cont’d)
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.
Case law does not really help
Can use Louis case to argue that the purpose is to provide residence – some permanent type of place
Therefore vacation rentals do not provide a residence, just a place to stay while not in your residence.
So perhaps can argue that violation of standard bylaw

15. 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).
We think we have it, right?
No more nightly or weekly rentals or do we?

16. Rental bylaws are ineffective to ban short term rentals
The Owners, Strata Plan VR 2213 v. Duncan & Owen, 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.

17. 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.
No tenancy agreement
Licensing agreement
Therefore, no Form K or move in fees (which referred to change in tenancy)
Also, SPA and bylaws distinguish between tenants and occupants

18. 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.
Large body of case law to distinguish between two
Cell tower agreements use a licence rather than a lease to avoid unanimous vote and subdivision

19. 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
Read alone, this would be interpreted to mean no bylaws regarding rentals

20. 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)
Read with section 121(1)(c), this would be interpreted to mean no bylaws regarding rentals

21. Options for Strata Corporations
SPA, s.141(2)
The strata corporation may only restrict the rental of a strata lot by a bylaw that:
Prohibits the rental of residential strata lots;
Limits one or more of the following:
the number or percentage of residential strata lots that may be rented;
the period of time for which residential strata lots may be rented
Very limited ability to have bylaws regarding rentals, but no such limitations regarding licensing.

22. Options for Strata Corporations
Create new bylaws
What does the strata corporation want to accomplish?
Not necessarily a one size fits all solution.

23. 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
Everyone knows everyone – don’t want strangers or would welcome a few and be able to keep an eye on things
Downtown – very touristy, lots of visitors, already an expected noise level
Quiet townhouse complex – normal day to day life not
Do you really want to through the baby out with the bath water?
Homestays – students
Home swaps – cheap vacations

24. permit some short term rentals set a minimum length of stay,
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
Home swaps yes, Air bnb/VRBO no, High Street Accommodations yes – skin in the game?
Minimum of a month – no more nightly or weekly, expect a commitment
Maximum number in complex – ensure community feel is not broken, prevents turning some complexes into effectively motels
Specific time of year – perhaps only summer when people spend more time outside and seeing the sights?
Regulate advertising – to ensure it does not appeal to wrong clientele
Terms of license agreement – ensure bylaw compliance

25. Bylaw to collect occupant information – PIPA considerations
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

26. Issues to Consider
PIPA (Personal Information Protection Act) 11. Subject to this Act, an organization may collect personal information only for purposes that a reasonable person would consider appropriate in the circumstances and that (a) fulfill the purposes that the organization discloses under section 10 (1), or (b) are otherwise permitted under this Act.

27. 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.
Do we really need the occupant information? If so, why?

28. Limit the number of key fobs
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
Any other security issues unique to that complex?

29. Flat rate of between $100 and $350 is common.
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?

30. 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.
Do we really need the occupant information? If so, why?

31. The amount of the fee is reasonable; The fee is set out
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:
The amount of the fee is reasonable;
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.
Do we really need the occupant information? If so, why?

32. Issues to Consider
The Owners, Strata Plan VR 2213 v. Duncan & Owen, 2010 BCPC 123 Suggests that $75 may be reasonable.
How much is reasonable?

33. The Owners, Strata Plan LMS 3883 v. De Vuyst, 2011 BCSC 1252
Issues to Consider
The Owners, Strata Plan LMS 3883 v. De Vuyst, 2011 BCSC 1252
Must be objectively reasonable, so look at:
Prevailing market conditions at the time; and/or
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.
How much is reasonable?

34. Change in risk in strata corporation’s policy – contact broker
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
Strata insurance – talk to broker – now permitting business in strata corporation – likely not a big issue, but non-disclosure of risk, good reason to deny coverage.
Unit owner’s insurance policy – unit owner making profit, use unit owner’s insurance to cover off initial risk of a client suing strata corporation – by bylaw likely most effective
Indemnity and responsibility bylaw – strata corporation’s current bylaws may already cover this off, but should be checked to ensure it would apply to damage caused by occupant.

35. Short term rentals are: are generally based on a license agreement.
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.
Strata insurance – talk to broker – now permitting business in strata corporation – likely not a big issue, but non-disclosure of risk, good reason to deny coverage.
Unit owner’s insurance policy – unit owner making profit, use unit owner’s insurance to cover off initial risk of a client suing strata corporation – by bylaw likely most effective
Indemnity and responsibility bylaw – strata corporation’s current bylaws may already cover this off, but should be checked to ensure it would apply to damage caused by occupant.

36. Conclusion Consider whether to ban or regulation?
Whether banning or regulating, consider the extent of the ban or regulation?

37. Questions

38. Veronica P. Franco vpf@cwilson.com 604-891-7714