Short Term Rental Occupancy Legalities and Bill 57

Ryan Carson

Ryan Carson: I basically put something together related to rentals and specifically short-term rentals. And if I have time, I'll show everybody a share screen of section 57 of the residential tenancies act, which is in Ontario part of the governing legislation, as many of you might know we can take a look at that as well.

It deals with specifically, landlord's giving notice of termination found on grounds of bad faith. Let's talk first about what everybody's been talking about, which is the option of short-term rentals. So, the common practice in Ontario is that a residential lease begins with a term of one year, while that can offer stability and certainty to renters.

It can also make things a bit difficult for people who need a place to stay for less than a year, or as the speakers have been talking about, you want to explore this exciting opportunity of revenue driven by short-term rental. And so short-term rentals have really emerged as a way for people to rent out their property.

That way they're not using and giving renters a more flexible option to suit how long they need to rent for. And as I think a couple of speakers mentioned doing the short-term rental option also. Allows you do weed out some of the bad tenants that might be potentially damaging your property.

They might be party animals. That kind of thing I think was alluded to. So, the short-term rental really allows you to potentially screen possible occupants and tenants that may be less desirable. So, websites like Airbnb and VRBO have really made the process incredibly easy for renters and people looking to rent out their properties on a short-term basis.

So, the question comes up a lot now about whether someone's. Who is renting their property using more traditional ways of renting their home, using more traditional lease can list it on any of these websites? For example, can John rent his apartment that he's lived in for the last 10 years?

Could he have rented out for a period of a short-term rental on some of these potential sites? So, he learns that he's going to be away from work, for example, for a period of say three weeks or three months and decides that since this place is going to be empty, he wants to rent it out on Airbnb to make some extra money to subsidize his costs.

But let's say in that particular example, John might be a tenant, so to speak. And so, does he need to get landlords permission to rent out the property? And so, the answer in most cases has been found to be, yes, a landlord can stop a tenant from potentially renting out on a short-term rental basis.

So, it's not so much of an issue if you're the owner and thus the landlord, and you want to rent out on a short-term rental basis, obviously many investors have found tremendous success in doing that. But this particular example illustrates if you have somebody who owns the property and a tenant is living there, but then the tenant is going to be away for three weeks or three months.

And they want to do a short-term rental. Could they do that without the landlord's consent? And in most cases the answer would be, they couldn't without getting consent of the landlord ahead of time, that would suddenly become an issue. And there isn't, there is a recent decision of the landlord tenant board, which clarified this.

But it's where a landlord discovered that their tenant had been renting out the unit on Airbnb and the bookings had been made into the future as well. And this was done without the landlord or the property owner’s consent.

And the tenant ended up getting evicted on grounds that they didn't get consent from the landlord. So, the landlord sought to evict the tenant for committing an illegal act under the rental unit. And the landlord board confirmed that renting out the rental unit on Airbnb without the consent of the landlord was actually an illegal act that violated rights under the residential tenancies.

And for the short-term rental, I think the key thing is to make sure if you've got a situation where you have ownership of a property and it's tenanted, we keep a close eye on it. And then you also want to make sure that if you are going to give any current occupants of your property the ability to rent it out, you want to make sure that they've asked for that consent in writing.

So, that's a short bit on short-term rentals from a landlord's perspective. And then there was the question of us talking briefly about section 57 of the residential tenancies act, which doesn't actually jive into the short-term rentals, but section 57 of the residential tenancies act does talk about that.

Landlords, essentially giving notice to terminate a tenancy. But it specifically speaks about the landlord giving that notice in bad faith and then being essentially penalized by the tribunal under the legislation in the act. If you have never looked at section 57 of the residential tenancies it's probably worth a read if you're going to obviously be investing in properties and having any sort of rental of the property, whether it's short-term medium or long-term because as everybody knows, you could obviously I'm short, medium or long-term rentals, but you want to make sure that specifically you're aware of what section 57 of the residential tenancies act.

And you'll want to make sure that you're aware of essentially the one-sided nature of it, which is the residential tenancies act. This section, particularly, is pretty heavy handed and strong against landlords, especially when landlords potentially could be acting in bad faith and particularly in bad faith, giving notice to terminate a particular agreement of rental.

So, it's really probably crucial the tip to summarize and wrap up here in my five minutes is you want to make sure that you have your lawyer and, or a team of paralegals very clearly explained to you the impacts on you as a property owner, as an investor, and as somebody who is going to be doing short, medium, and long-term run.

And the effect that section 57, at least in Ontario, has on those situations. So, you can be compliant because it is a very strong, heavy-handed section that is against landlords. And the presumption is actually that landlords have acted in bad faith. And so there's an onus on the landlord to prove that they haven't actually acted in bad faith. So, it is pretty heavy handed against the landlord unfortunately.

Laurel: I guess I'm not going to jump in now, Ryan. And I think, what, basically what you're saying is that's the way it is in Ontario. It's different from other provinces. So, we also know that a lot of people go and invest in other provinces for that reason.

There's not nearly the same kind of shall we say oversight that the place has on landlords and we all do the best we can. So, thank you very much.