Airbnb: Renting Out Your Condo
5 Questions to Ask Yourself Before Getting Started
Alexandre Ayad, Esq., and Basile Muller, Esq., Odier Halpérin Steinmann Sàrl
Renting out one’s condominium (PPE) through Airbnb or a competing platform may seem like an attractive option for the owner.
However, it raises certain questions that we invite you to consider below.
1. Can the condominium bylaws prohibit an owner from renting out a condominium unit through Airbnb?
Under the law, in a condominium ownership regime, each co-owner has the exclusive right to use and make interior alterations to his or her apartment (Art. 712a, para. 1, CC).
In doing so, however, the owner must not restrict the exercise of the rights of the other co-owners, nor damage the common areas and facilities of the building, impede their use, or alter their exterior appearance (Art. 712a, para. 2, CC).
The law also allows co-owners to adopt rules governing the administration and use of the condominium. This option is exercised in most condominium associations, most often at the time of their formation.
The condominium association may thus specify in its bylaws the permitted uses of the building and the apartments. Conversely, the condominium association may also prohibit one or more uses.
What if the building regulations stipulate that the building and the apartments are intended solely for residential use, or if they expressly prohibit renting them out through Airbnb or other similar platforms?
The Federal Court recently addressed this issue in its decision 5A_436/2018, handed down on April 4, 2019.
This ruling concerned a condominium building that had always been intended for residential use. The condominium association had adopted management and usage regulations prohibiting the use of units for commercial purposes, with the exception of offices. Thus, the operation of a medical practice, a laboratory, a boarding house, a craft workshop, a music school, and any activity involving a constant flow of customers was expressly prohibited.
After discovering that one of the co-owners was listing his apartment on Airbnb, the homeowners’ association decided to amend its bylaws by adding a clause prohibiting the unauthorized rental of apartments—whether by the day, week, or month.
Tasked with determining the validity of this clause, the Federal Court held that it did not constitute a serious restriction on the appellant co-owner’s right to property.
The Federal Court thus held that the condominium association could validly prohibit, in its rules of administration and use, the rental of an apartment on an online platform such as Airbnb for short-term stays.
It follows from this ruling that, before listing their apartment for rent on Airbnb, owners must ensure that the condominium association’s rules and regulations, on the one hand, do not expressly prohibit short-term rentals through Airbnb and, on the other hand, that such rentals do not conflict with the intended use of the property as set forth in the rules.
2. Can the condominium bylaws restrict an owner from renting out a condominium unit through Airbnb?
Since the advent of Airbnb, we have increasingly seen clauses being included in the management and usage regulations of many condominium associations—not to ban Airbnb, but to prevent abuse.
In general, these clauses restrict a co-owner’s right to rent out all or part of their residence through Airbnb by setting a cap on the number of days of rental permitted. In Geneva, these clauses often set the number of permitted rental days at 90 days per year, in line with the limit established by law for apartments subject to the LDTR (see point 3 below).
These regulations sometimes stipulate that a property owner who rents out their apartment through an online platform must notify the condominium association’s administrator, who then keeps track of the number of rental days per year. If the maximum number of days allowed is exceeded, the rental is considered a prohibited change of use. A financial penalty may therefore be owed to the condominium association.
Since a clause that restricts the ability to rent through online platforms is less restrictive for co-owners than a complete ban, we believe its validity must be recognized in light of the aforementioned Federal Court case law.
Owners wishing to rent out their property are therefore advised to check whether the PPE’s rules of administration and use contain a clause restricting rentals through online platforms and, if so, to comply with it.
3. Does the government impose a time limit on Airbnb-style rentals?
In Geneva, Article 4A of the Implementing Regulations for the Law on the Demolition, Alteration, and Renovation of Residential Buildings (RDTR) stipulates that “the rental of an entire dwelling through rental platforms is considered a change of use within the meaning of the law if it exceeds 90 days per year.”
This provision applies to all apartments subject to the Law on the Demolition, Alteration, and Renovation of Residential Buildings (LDTR), which covers the vast majority of apartments in Geneva.
However, a change of use requires the prior issuance of a special permit by the Building Permits Office, which is granted only when very restrictive conditions are met.
Among these conditions is, in particular, the requirement to compensate for the loss of residential space by simultaneously converting commercial or administrative space into housing. The premises converted into housing must therefore provide at least an equivalent amount of space and housing conditions, have rents that meet the primary needs of the population, and, as a general rule, be located in the same neighborhood.
The owner of a single property will therefore not be able to make such an offset.
In practice, this makes it extremely difficult to obtain authorization to rent an apartment subject to the LDTR through an online platform for more than 90 days per year. The landlord therefore risks penalties if they exceed this limit and the government finds out.
4. Does the building’s location in a development zone affect the owner’s ability to rent out the property?
As of November 19, 2016, the purchase of an apartment in a development zone requires the buyer to personally occupy the unit for the duration of government price controls, which is 10 years from the average date of delivery of the units.
Owners who purchased an apartment in a development zone on or after that date are therefore prohibited from renting out their property, unless there are exceptional and valid reasons.
To date, there is no case law on this issue. However, it can be assumed that this prohibition extends to rentals through online platforms such as Airbnb.
As a precaution, owners who purchased an apartment in a development zone after November 19, 2016, should refrain from offering it for rent—including through Airbnb—while it remains under government oversight.
In contrast to this situation is that of a property owner who purchased an apartment in a development zone before November 19, 2016, and who may rent out the apartment while complying with the maximum rent set by the government.
Since owners who purchased their apartments before November 19, 2016, are not required to live in them personally, they should therefore be allowed to rent them out through Airbnb. However, if the government learns that the rent charged is proportionally higher than the authorized rent, it could order the temporary rentals to cease and even impose penalties.
5. What are the differences if only part of the apartment (e.g., a bedroom) is rented out?
Airbnb allows hosts to rent out their entire apartment or just a part of the apartment they live in, such as a bedroom.
If the owner lives in the property and rents out only part of the apartment through Airbnb, the 90-day-per-year rental limit does not apply.
In a development zone, it can be assumed that renting out part of the apartment would be permitted—regardless of whether the apartment was purchased before November 19, 2016—if the rest of the apartment is occupied by the owner at the same time.
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While not exhaustive, this brief overview in five questions offers a glimpse into the pitfalls of renting out an apartment as a private landlord through an online platform such as Airbnb.
Since the regulations and case law governing this type of lease are constantly evolving, we recommend that landlords wishing to enter this market seek advice in advance from a legal advisor specializing in real estate.
Alexandre Ayad, Esq., and Basile Muller, Esq.,
Odier Halpérin Steinmann Sàrl
15 Boulevard des Philosophes – 1205 Geneva
Airbnb: Renting Out Your Condo