Short-Term Rental Agreements

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Key Takeaway
Short-term rentals can become protected by the Residential Tenancies Act if the stay begins to resemble a tenancy.

What differentiates a short-term rental agreement from a residential lease?

The Residential Tenancies Act (RTA).

The RTA does not apply to short-term rentals... see RTA 5(a).

But sometimes, the line between a short-term rental and a standard tenancy is blurred.

Even when there is a contract that states it's a short-term rental, the RTA can still classify the stay as a tenancy.

There is plenty of case law where guests become protected under the RTA despite the words of the agreement.

It's up to the person relying on the exemption (usually the owner) to prove that the RTA does not apply.

These types of cases are highly fact driven. Each one comes down to the individual circumstances surrounding the dispute.

So instead of making you read through case law, to understand the nuances... I did it for you.

Here are the key factors considered in these types of disputes:

Purpose of the Stay
Intention is the main component of the RTA exemption. Why is the guest staying there? Vacation, work trip, etc...? Any agreement should clearly state that the guest is using the property for a specific purpose and should record a "home address" for each guest.

Furnishings
The adjudicators seem to make a big deal about furnishings. In one case, the fact that the unit was not furnished was major evidence that it was a tenancy.

Term Length
Most of these situations deal with weekly term agreements or such that were renewed successively. Anytime these situations exceed one (1) month you need to be careful before proceeding further.

Innkeepers Act
It's common for short-term rental agreements to reference the Innkeepers Act. It's a way of saying this is not a tenancy under the RTA, but more like a hotel/motel. If relying on this, you need to be aware of section 6 and keep copies of the Act displayed in the premises:

Copy of section 4 to be conspicuously exhibited
Every innkeeper shall cause to be kept conspicuously posted up in the office and public rooms and in every bedroom in the inn a copy of section 4 printed in plain type, and the innkeeper is entitled to the benefit thereof in respect of such goods only as are brought to the inn while the copy is so posted up.  R.S.O. 1990, c. I.7, s. 6.

Cleaning Service
Most of these cases mention cleaning or maid services. Offering these services is evidence of short-term rentals. A lack of this service helps prove the case for tenancy.

HST
Some of the strongest evidence an owner can present is tax. Is the owner charging tax on the rate? Are they providing a receipt that shows the tax amount? Are they paying the HST back to the government? Prove this and there is a good change the RTA is not taking jurisdiction.

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Manage to stay on the correct side of these issues, and an owner can avoid a short-term rental being classified as a tenancy.


Written by
Zachary Soccio-Marandola
Real Estate Lawyer

Direct: (647) 797-6881
Email: zachary@socciomarandola.com
Website: www.socciomarandola.com


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