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Does an AirBnb arrangement create a lease or licence?

Due to the advent of online letting platforms such as AirBnb, short-term rentals have become increasingly popular. However, these kinds of arrangements present many legal ramifications.  The case of Swan v Uecker [2016] VSC 313 is a recent example of how AirBnb can create confusion about whether such arrangements can be classified as a lease or licence.

The Facts:

A landlord leased a two bedroom apartment to a tenant under a lease. The terms of the Lease permitted subleasing but required the consent of the landlord. . However, without consultation with the landlord, the tenant entered into what they classified as “licences” with Airbnb guests. These “licences” allowed AirBnb guests to stay in the apartment for between three and five days and occupy the entire apartment without the tenant being present. As part of the arrangement, all of the bookings were made online, the guests agreed to leave at the end of their stay and the premises were said to be the tenant’s principal place of residence.
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Property Law – Retail Leases Act Changes

Parties to retail leases need to be aware of amendments to the Retail Leases Act 1994 (NSW) (“RLA”) that have come into effect on 1 July 2017.

Some of the key changes to leasing of retail premises and their effects are identified below:
  • New Lessor Disclosure Requirements– Requires full disclosure in the lessor’s disclosure statement of any obligation of the lessee to contribute to the lessor’s outgoings and prevents recovery from outgoings that are not disclosed. This means a lessee will not be liable to pay any amount in respect of any outgoings unless the liability to pay the amount was disclosed in the disclosure statement for the lease.
  • Turnover Rent – Lessees may find shelter from turnover rent clauses in leases by utilising online transaction which now excludes online sales revenue, except where the goods are delivered from or at the premises (or the Centre) or where the transaction takes place while the customer is at the premises.
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Calling upon a bank guarantee – not as simple as you think

The decision in Universal Publishers Pty Ltd v Australia Executor Trustees Limited [2013] NSWSC2021 suggests that the ability of a landlord to call upon a bank guarantee for the purpose of reinstating and remediating the premises depends upon the terms of the lease.

If the lease provides that the landlord can call upon the bank guarantee for an actual breach of the lease or an actual default by the tenant, however the landlord cannot call upon the bank guarantee where there is only claimed or alleged breach or default by the tenant.

If there is a dispute as to the breach or default, the landlord may be liable for damages to the tenant if they call upon the bank guarantee and the tenant is found not to have been in breach or default.

Whether you are a landlord or tenant you should seek the advice of a commercial lawyer before entering into a lease. Our commercial lawyers at Matthews Folbigg can provide comprehensive advice and assist in lease negotiations and preparation.
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