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. 

Ontario lawsuits illustrate hosting liability risks

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:

•  A St Thomas man is suing Airbnb, and the caretaker and owner of a short-term rental unit in Ottawa for $1.67 million after he fell down a spiral staircase and suffered a traumatic brain injury in January 2020, according to court filings.  
• Court documents also show a Toronto woman recently launched a $1-million lawsuit against Airbnb and the owner of a short-term rental after she was mauled by a dog that was walking freely inside a unit in Scarborough in May 2020.
• A lawsuit for more than $2 million was launched against Airbnb, the owner and caretaker of a short-term rental unit in the central Ontario ski community of Mulmur by a Toronto man after he fell from a second-floor balcony in his sleep. 

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. 

Condo corps may be at risk with licensing 

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. 

Personal liability limits of $5 million for a property owner may not be readily available in the market.- Mark Cripps, IBC spokesperson

"[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."

It might be a good sign, according to Wieditz, but according to the Insurance Bureau of Canada (IBC), that kind of liability insurance for short-term rentals isn't typically available through the biggest insurance companies in the country. 

"Personal liability limits of $5 million for a property owner may not be readily available in the market and are typically offered by specialty carriers," spokesperson Mark Cripps wrote in an email to CBC News. 

"Anyone considering using their property for short-term rental should speak to their insurance representative."

Insurance should be mandated, says Airbnb critic

While that much insurance might be a tall order for some carriers, cities should require hosts and guests to have a policy that goes beyond the basic protection offered by online companies like Airbnb, Wieditz said. 

"Often we hear about parties and violent incidents in some major cities, and often now in rural areas and cottage towns. In the grand scheme of things these are pretty rare, but once they do happen, I think the guests and hosts should be protected, and having a registration system in place makes sure insurance exists in an area that's fairly unregulated still." 

Airbnb offers hosts up to $1 million US in damage protection and, according to Wieditz, the company will often settle matters out of court to avoid negative headlines. 

Airbnb said Thursday it is working closely with officials from the City of London when it comes to best practices around the community's draft short-term rental bylaw.

Company spokesperson Matt McNama said in an email that the city's proposal to require at least $5 million in insurance is unusual compared to other Canadian cities.

"This proposed requirement is exceptionally out of line with national standards, and we encourage the City of London to reduce the required insurance coverage."