The Supreme Court of Victoria was recently asked to consider whether or not a tenant, under a residential tenancy, was in breach of the provisions of the lease by entering into contracts with Airbnb. These allowed guests to stay for a short term, booked via the Airbnb website.

 

The case went first to the Victorian Civil and Administrative Tribunal who ruled that as only licences were granted to Airbnb guests, not leases, there had not been an improper subletting of the apartment. That was appealed to the Supreme Court of Victoria.  The Court said the Airbnb agreement at issue, which allowed occupation of the whole of the apartment, was a lease for the agreed period.  This was accordingly a subletting of the apartment and a breach of the lease, which prohibited subletting without the written authorisation from the landlord.  The decision was not about an individual room being let, so an argument remains that that would not breach this type of clause.

 

The judge noted that the case was not about whether or not Airbnb arrangements themselves are illegal or not.  It was a decision based on the particular lease. The context was important.  Although it was a residential lease, the judge noted that commercial leases are often much wider in their prohibitions and for example include provisions preventing the tenant from subletting, assigning or granting a licence or otherwise parting with possession. These broader terms would most certainly prohibit an Airbnb arrangement. That would likely be the case, for example, with the ADLSi form of deed of lease which provides “The Tenant shall not assign sublet or otherwise part with possession… without first obtaining the written consent of the Landlord…”.

 

In New Zealand, a Wellington couple who sublet a property was found by the Tenancy Tribunal to have breached their residential tenancy agreement. That tenancy agreement expressly prohibited subletting of the property.  MBIE’s pro forma tenancy agreement requires the landlord’s consent to any subletting or assignment unless the landlord has prohibited subletting or assignment.  So where the pro forma is used without more, the Australian Court’s decision may be a useful reference for landlords and property managers.

 

Whether an Airbnb licence breaches body corporate operational rules might also be an interesting question. The ADLSi Model Operational Rules, that have been adopted by many bodies corporate, do not go so far as requiring body corporate consent to letting. More often these rules will require names and contact details to be provided of the tenants and occupants of the unit from time to time. If that was what the rules required, then technically occupant’s details will probably need to be provided to the body corporate manager where Airbnb is used.

By Denise Marsden