Growing regulation of Airbnb makes hosts legally vulnerable like never before, say experts

The growing drive by Ontario municipalities to regulate, license and crack down on online short-term rental services such as Airbnb may make hosts and landlords legally vulnerable like never before, according to experts. 

What began in Toronto as a means to rein-in the rampant financialization of the city's housing market has now spread to other Ontario communities, where regulations aim to stop property speculators, quash nuisance parties and preserve the social fabric of neighbourhoods.

The changing legal landscape around short-term rentals includes more rigorous standards and could result in extra damages for plaintiffs, especially if a court finds owners and operators weren't following local laws. 

"You may expose yourself as an operator or a host to additional liability, for example, if you try to get around municipal licensing and operate on a short-term basis without meeting municipal requirements," said Laura Gurr, a partner with Cohen Highley LLP who specializes in condominium and affordable housing law. 

One only needs to look at some of the cases before the courts in Ontario to get an idea of how hosts and landlords can be sued and the amounts involved. 

For example:

In that last case, the statement of claim alleges he was sleeping in a bed that was pushed up against a balcony overlooking the building's main floor and, when he rolled over, he went over the railing and plummeted onto the floor below, causing severe injury. 

Gurr said cases like these illustrate the need for owners and hosts to understand liability risks. She said that's especially important in multi-residential buildings, where condo corporations could find themselves on the hook for damages, even when a condo is being used as a clandestine hotel without the corporation's knowledge. 

She said much of her work involves shutting down surreptitious short-term rentals because they are creating problems for other owners in the building.

"I see it in my practice probably once a month," she said. "Particularly when you have common amenities like a pool, having a short-term rental can place a particular strain on those types of amenities and it creates a lot of conflict with occupants who are owners."

For that reason, London, Ont., is proposing a bylaw that would require short-term rental owners to get written permission from their condo board in order to qualify for a licence. 

The city is also going further than most municipalities when it comes to insurance requirements, proposing that anyone hosting guests through an online short-term rental service must have at least $5 million in liability insurance to operate. 

"[It] seems to be a good step in making sure hosts and guests are protected against any type of liability claims," said Thorben Wieditz, director of Fairbnb Canada, an organization seeking "fair rules" for short-term rentals. 

"The fact London has the foresight to include this, I think that's a good sign for guests and hosts."