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Historic Airbnb-condo deal a win-win: Lash

A historic partnership between Airbnb and Neptune condominiums is a win-win, says Toronto condominium lawyer Denise Lash, who helped ink the deal.

“Prior to the agreement, unit owners were already renting out their condos on a short-term basis and getting the revenue, while the condominium corporation was left with extra cleaning bills and even damage, in some cases,” says Lash, principal of Lash Condo Law.

“So now we have an agreement that gives the corporation some additional protection and revenue, and rules that establish procedures that owners must follow if they use their unit for short-term rentals,” she tells AdvocateDaily.com.

Like some other condominiums in downtown Toronto, Neptune’s declaration allowed owners to rent out their units for short-term stays, explains Lash. 

“And, like many other buildings, they had some challenges,” says Lash. “As a result of increased activity, there were more incidents of damage to common areas, more noise complaints and increased cleaning costs.”

The condo board wanted to prevent short-term rentals and attempted to amend the declaration, but that requires the consent of 80 per cent of all 871 unit owners.

They were unsuccessful, says Lash.

While the condo board continued to grapple with the issue, Lash spoke at a seminar on short-term tenancies. Speaking at the same event were representatives from Airbnb and that’s when Lash learned about the company’s Friendly Building Program.

“It’s a way of working together collaboratively to benefit all parties. Particularly in condo corporations whose declarations permit short-term rentals, hotelling is here to stay,” she says.

“Where the declaration permits it, there is no ability to prevent short-term rentals. It's important to focus on the issues and figure out a way to deal with the specific problems or concerns.”

Eventually, Neptune, which is located near the city’s waterfront, signed the first such deal in Canada with the international short-term rental giant, according to a CBC report.

Lash says the agreement helps put rules and conditions on something that is inevitably going to continue.

“This agreement benefits all owners in the corporation because it uncovers the veil which had previously permitted unit owners and residents who were using the service, to fly under the radar,” she says.

Lash says the agreement also provides a number of benefits and protections to the corporation. According to the CBC, those measures include:

  • Security will have access to a website which shows who is hosting and who their guests are at any given time.
  • Guests must have government-issued ID on file with Airbnb.
  • The condo corporation can request Airbnb to kick someone off the platform if too many complaints are incurred, on a case-by-case basis.
  • Airbnb shares five per cent of revenue from rentals with the condo board.
  • Property insurance up to $1 million will be provided by Airbnb for units and common areas.
  • Hosts pay $50/month for building upkeep.

"This gives the board and management more control and power in enforcing the rules if there's an issue with a unit. Before this agreement, the corporation was restricted to the enforcement procedures under the Condo Act, which often was a legal letter and potentially a long, drawn-out legal process," says Lash.

"In the interim, those non-compliant owners or residents would simply continue to list their unit — frequently at nightly rates high enough to offset the pressure of legal demands from the corporation. Now, Airbnb can step in and prevent those owners from listing their units or getting any revenue." 

She also says the insurance coverage is a huge bonus for the condo.

“It requires that any incident that affects common elements — or sometimes the unit itself — goes through Airbnb’s insurance first,” Lash says.

“Without this agreement, if there’s any damage to the common elements, the condominium corporation would likely have to put it through its own insurance.”

The bottom line is that short-term rentals “were legitimately occurring at Neptune in compliance with the declaration," says Lash.

“This agreement helps manage the use of short-term rentals and provides the corporation with some revenue at the same time.”

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