Solving AirBnB Sublet Problems for Ontario Landlords

With the prevalence of Airbnb rentals we regularly get calls at our office about the problems they cause for Toronto landlords, mainly in the condominium sector. Renting condominiums and subletting them out on Airbnb has become a popular business, mainly because it is possible to earn a significant margin on the Airbnb short term rent versus monthly rental. At the same time from a practical perspective, there is little liability on the part of the “Host” for any problems that are caused.

While tenants are permitted under Ontario law to sublet their units it must be with the consent of the landlord, which consent cannot be arbitrarily or unreasonably withheld. Further, restrictions imposed under the Residential Tenancies Act eliminate any potential profit by restricting the total amount of rent collected from sub-tenants to an amount that is no more than that which is charged by the landlord / owner (Sec 134 (3) (a)). As charging illegal rent contrary to section 134 is an offence pursuant to section 234 (l) it is an illegal act within the meaning of Sec. 61 and gives rise to eviction.

All of that being said, it is often a problem to prove that the tenant is collecting more rent then the rent charged by the landlord or making a profit off the unit (although it is difficult to imagine why they would be renting out units otherwise). It can also however be an offence under the recently enacted Municipal bylaws in Toronto which place restrictions on short-term rentals. These infractions also give rise to the right to serve a notice pursuant to section 61.

Even if it is not possible to prove the tenant is collecting more than the permitted rent or otherwise breaching the municipal bylaw it may nevertheless be possible to serve a notice of termination based on the tenant interfering with the landlords legal interest pursuant to section 64. This would be the case for example, where the unit is located in a condominium building that does not permit short-term rentals. The landlord might also consider applying under section 100 to terminate the tenancy on the basis that the tenant sublets the unit without the landlord’s consent.

As with all applications to terminate a tenancy it is not sufficient to simply prove that there are grounds under the ACT giving rise to termination. The landlord must also show why it would not be unfair to refuse the eviction pursuant to section 83. Given current market conditions this is often the most difficult challenge. Because these arrangements are usually of a purely commercial nature however any fairness argument should be relatively easy to overcome.

The best way to proceed to deal with a tenant renting on AirBnB will depend on the specific facts of the case. If you are facing a situation with Airbnb sublets or have any other issues relating to residential property disputes we encourage you to contact our office at 416-628-4835 or email us via the website and we will attempt to address them as efficiently as possible.