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December 05, 2018

Airbnb and short-term letting in sectional title complexes






Can body corporate’s rules prohibit this?

I believe that Airbnb has over 40,000 South African active listings on their site. How many of those are owners in sectional title complexes, and how do short-term rentals affect security in complexes?
As our complex views short-term rentals of under 3 months as a security risk, our body corporate rules provide:

SHORT-TERM RENTALS
It is recorded that no section shall be let by any owner or resident for a period of less than 3 months at a time. No "Airbnb" or similar leasing/bed and breakfast/hotel/serviced apartment arrangements or platforms shall be permitted unless the prior written consent of the Trustees is obtained.
FAILURE TO ADHERE TO THIS RULE SHALL ATTRACT AN IMMEDIATE FINE OF R5000 PER OCCURRENCE/INCIDENT, WHICH AMOUNT SHALL INCREASE ANNUALLY BY 10%.

But can we enforce this? It seems that we must wait for a High Court ruling.

The Community Schemes Ombud Service Act (“the CSOS Act”) applies. In July 2018, the CSOS adjudicator heard a dispute between the body corporate and three owners regarding the amendment of the body corporate’s conduct rules that prohibited letting units in the scheme for a period of less than 3 months. The owners, who had been making use of the Airbnb website to let their units for less than three months at a time, contended that this rule was unfair and unreasonable.

The adjudicator had to consider the following questions:

1.     Is the rule prohibiting short-term rentals in compliance with the Sectional Titles Schemes Management Act (“the STSMA”)?
2.     And, if so, is the rule applicable and enforceable against the 3 owners letting their units on Airbnb?
3.     Is the rule prohibiting short-term rentals in compliance with the STSMA?

The adjudicator considered section 10(3) of the STSMA, which requires that a scheme’s conduct rules be reasonable and apply equally to all owners of units within the scheme, and the balance between the respective interests of the owners and the body corporate.
I
n summary, the adjudicator’s findings were as follows:
·         The rule prohibiting short-term rentals of less than 3 months at a time is reasonable and fair in the circumstances.
·         Different rules cannot apply to different owners and the owners who previously let their units via the Airbnb platform have to abide by the new rule.

·         However, the rule should only become enforceable after a fair and reasonable notice period.

Having reached that conclusion, however, the adjudicator finally found that the CSOS Act “does not confer any jurisdiction on an adjudicator to make an order whereby a party can be instructed to cease his/her/their behaviour in contravention of a rule” and further that the act “does not confer the jurisdiction on an adjudicator to declare a rule reasonable and enforceable.”

The adjudicator confirmed that as she does not have the required jurisdiction she stated that “given the uncertainty in schemes insofar as short term letting is concerned, a High Court ruling would be highly beneficial”.

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