Toronto landlord launches $1.6M lawsuit after city gave stranger approval to rent her condo on Airbnb

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A Toronto landlord is suing her former tenant, the tenant’s boyfriend, the City of Toronto and Airbnb, after her downtown condominium was rented out on the short-term rental platform for months without her knowledge or consent.

The statement of claim, filed on behalf of Allison Rasquinha in Ontario Superior Court of Justice on June 22, says Michele Nicole Carter and Jose Cornejo Kelly registered Rasquinha’s studio condo on Adelaide Street West with the city for short-term rental without authorization and rented it out dozens of times on Airbnb in violation of the condo corporation’s rules.

It accuses Airbnb and the city of facilitating the registration and rental of the unit, claiming both neglected their responsibilities to verify whether Carter and Cornejo Kelly had the legal right to rent out the property on a short-term basis.

“[My condo] is my most valuable possession. It’s near and dear to my heart,” Rasquinha said in an interview with CBC.

“It’s a terrible feeling to see something that you love be weaponized for profit and gain that you weren’t even aware of.”

The lawsuit seeks $1.6 million in damages from the four defendants for financial losses and mental anguish, among other harms. The allegations haven’t been proven in court and none of the defendants has filed a statement of defence yet.

Multiple attempts to contact Carter and Cornejo Kelly by phone, email and at a Hamilton, Ont., home registered to owners with the same names were unsuccessful.

According to the statement of claim, Rasquinha entered into a one-year lease agreement with Carter that began on July 1, 2022. 

The agreement, viewed by CBC Toronto, prohibits tenants from subleasing the property without written permission from the landlord and compels them to abide by the condo corporation’s declaration. The declaration, also viewed by CBC, forbids renting out residential units for less than a year.

Two weeks after the lease took effect, the city issued a short-term rental registration for the unit to Jose Cornejo Kelly, according to the claim and a document obtained by Rasquinha through a freedom of information request.

CBC Toronto previously reported that Carter said Cornejo Kelly lived in the unit with her, although his name wasn’t on the lease. Rasquinha said she had never met him and she was never informed that he’d moved in. 

Property rented ‘at least 30 times,’ lawsuit says

The claim alleges Carter and Cornejo Kelly listed the unit on Airbnb between July 14, 2022, and April 2, 2023.

“The property listing has over 30 reviews and as such, it is evident that it has been rented at least 30 times during the duration of the listing,” the lawsuit says. 

Rasquinha confronted Carter in February after learning from the building’s security team that she may have been running an unauthorized Airbnb business, but Carter denied knowing anything about it, according to the suit and emails viewed by CBC Toronto.

In March, Rasquinha located a listing for her unit on Airbnb, according to screenshots of the listing, and she contacted the tenants, the city and Airbnb in an attempt to bring the situation to an end.

Suit alleges breach of contract, unjust enrichment

Rasquinha’s lawsuit alleges Carter and Cornejo Kelly breached the terms of the lease by registering and listing the unit for short-term rental. It also accuses them of unjustly enriching themselves by receiving payments from short-term rental customers.

When Carter and Cornejo Kelly spoke to CBC Toronto in May, Carter said she rented out the condo on Airbnb on occasion when she was out of town.

At that time, Carter said she and Cornejo Kelly were unaware that short-term rentals weren’t allowed at the building because even though the condo rules were referenced in the lease agreement, Rasquinha had not provided her with a copy of the declaration.

Both Carter and Cornejo Kelly said they took down the listing when Rasquina told them it wasn’t allowed.

‘Everyone had a financial gain’ except property owner, lawyer says

Mirielle Dahab, Rasquinha’s lawyer, said the crux of the claim is that all of the defendants benefited financially through the wrongful renting out of the unit.

Airbnb collects service fees from both guests and hosts for all accommodations booked through its platform, according to its website. Meanwhile, the city collects a $53 fee from those who register their units for short-term rental and charges a six per cent municipal accommodation tax on all short-term rental revenues.

“Everyone had a financial gain” except Rasquinha, said Dahab. “Whether it’s the city with their rental taxes, whether it’s Airbnb with their profit margins … and then obviously the two individuals.” 

Dahab argued that Carter and Kelly had an obligation to abide by the condo corporation’s rules, whether they received a physical copy of the condo’s declaration or not.

“When you’re agreeing to the terms of a contract or rules … the onus is on you to make sure that you’re complying with them,” she said. “If you don’t know what they are, ask for them.”

Airbnb, city accused of negligence 

The lawsuit accuses Airbnb of negligence for facilitating through its online platform the advertisement, rental and payment for short-term rental of the unit, arguing the company has a responsibility to ensure that all listings posted on its platform are valid and authorized by the property owners.

It also accuses Airbnb of failing to promptly remove the listing for Rasquinha’s unit from its platform after she informed the company of its “fraudulent nature” in March.

Airbnb took down the listing on April 16 after its customer service team followed up with the host about ownership of the condo.

The company said in a statement the host is no longer hosting on the platform, but didn’t specifically address the claims in Rasquinha’s lawsuit.

The lawsuit also accuses the city of negligence, arguing it did not conduct any background checks to confirm whether Carter and Cornejo Kelly were authorized to rent it out or whether the condo corporation allowed short-term rentals.

A spokesperson for the City of Toronto said in an email it wouldn’t comment on the allegations in Rasquinha’s lawsuit because the matter is before the courts.

Generally, the city said to register a unit for short-term rental on Airbnb, hosts only have to prove it’s their “principal residence” using an Ontario driver’s licence or Ontario photo card. The city said some applications are approved automatically, while others require additional review or a property inspection. 

Rasquinha said the city should be doing more to vet people who apply for short-term rental registration.

In an email viewed by CBC Toronto, a city employee told Rasquinha the city doesn’t have the resources to verify that those who apply for short-term rental registration are authorized to do so or whether short-term rentals are authorized at the building before they approve registrations.

“If they are going to launch a regulation service and take fees and take taxes from short-term rentals, they have a duty of care to the citizens of Toronto to be doing a good job on handing out these licenses like they’re not candy,” Rasquinha said. 

The city said in its statement it’s the responsibility of building property managers to inform the city of any condo corporation rules around short-term rentals, and that it’s the responsibility of the owner or tenant to follow them.

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