Airbnb And Home-Sharing: Beware Of Legal Pitfalls

I recently became acquainted with the concept of a “sharing economy,” and the idea of getting some use out of unused spaces in my home seemed quite intriguing. However, I should have realized that in the highly regulated world we live in, things would not be as simple as they seemed…

Since its inception back in 2008, Airbnb has become a success story of the “sharing economy,” growing into an international business estimated at $10 billion. However, while Airbnb and similar websites are growing in popularity, this type of home-sharing remains in a legal limbo in many jurisdictions, such as the Province of Quebec. This leaves home renters open to unforeseen legal pitfalls.

“The problem is that in many cases, these rentals are illegal, and those who post their apartment or home on Airbnb without the proper government approval are subject to steep fines.”

– Monique Muise, Montreal Gazette, July 24, 2014

The Quebec Regulation respecting tourist accommodation establishments is quite explicit: “Any establishment operated by a person who offers for rent to tourists, in return for payment, at least one accommodation unit for periods not exceeding 31 days is a tourist accommodation establishment,” and thus falls under the regulation.

“Currently, that law requires anybody renting out accommodations for less than 31 days to obtain a $250 permit from la Corporation de l’industrie touristique du Québec. Renters must also be covered by civil liability insurance totaling at least $2 million per claim, and must pay a host tax (usually between $2 and $3 a night) to Revenue Quebec.

Anyone failing to meet these criteria faces fines ranging from $750 to $2,250 per day for a first offense. The fines increase to between $2,250 and $6,750 for subsequent violations.”

– Monique Muise, Montreal Gazette, July 24, 2014

Again according to The Montreal Gazette, which has run several articles on the subject over the last year, “Airbnb, the online accommodation site, has taken the world by storm, registering more than 15 million stays in more than 190 countries globally since 2008 — and catching the hotel industry, tourism boards, regulatory bodies and sometimes property owners off guard.”

“Whether the hotel industry likes it or not, San Francisco-based Airbnb, with a market valuation of $10 billion, is here to stay. And so, whether Airbnb and its fans like it or not, this is why it has become all the more urgent to address some related social, fiscal and legal challenges.

Those include figuring out how to track rental income earned through Airbnb, for tax purposes; raising public awareness that tenants who sublet their dwellings without the consent of their landlords are violating the rules in their leases; and making sure people know there are insurance complications when it comes to liability for property damages that may arise.

Perhaps the biggest issue, for the general taxpayer, is that Airbnb in Quebec does not currently collect any of the room or sales taxes that traditional hotels charge. It should.”

– Editorial, Montreal Gazette, August 15, 2014

Home-sharing has also provoked the ire of the hotel industry in several jurisdictions, such as Montreal and Quebec City, and the industry is actively lobbying the provincial government to enforce its tourism regulations in the field of home rentals. The Gazette mentions that in mid-2013, Tourism Quebec did confirm it was cracking down on home rentals after numerous complaints from groups like the Association Hôtellerie Québec (AHQ), which represents hotel owners in the province.

“Airbnb is not illegal per se,” according to Eve Paré, president and general manager of the Hotel Association of Greater Montreal. In an interview with the Montreal Gazette, Paré said, “the playing field is not level as owners do not abide by the same rules or pay taxes on income, lodging or even sales. Yet nobody knows how many unofficial lodgings there are, so it’s difficult to know the impact.”

In certain jurisdictions, such as San Francisco (home of Airbnb) and Portland, Oregon, Airbnb has already agreed to add those jurisdictions’ existing hotel taxes to its online reservations. A similar arrangement would be in the works with the government of Quebec, which formed a special advisory committee in January of last year.

In the meantime, use extreme caution, do your homework and carefully study your local jurisdiction’s laws, regulations and bylaws before entering the home-sharing market. Thread carefully – as usual, Big Bro’s watching…

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One Response to Airbnb And Home-Sharing: Beware Of Legal Pitfalls

  1. Lesa Mallozzi says:

    Hey, thanks for the article. Really thank you! Great.

    Like

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