AirBnB “licences” may actually be leases

AirBnB might be a great way to source accommodation for your next holiday, but if you are a residential tenant you might want to check the terms of your lease before using it to make some extra cash.

A recent Victorian Supreme Court decision, Swan v Uecker (2016) VSC 313 (10 June 2016), found that tenants who had rented out their St Kilda apartment on the popular home-sharing website were in breach of their lease.  Tenants, Barbara Uecker and Michael Greaves, offered guests the use of either a single room or the entire property.  They argued that because the apartment was still their primary residence, and because they could ask guests to leave if they overstayed, the arrangement was not a sublease but a licence.

In addition, the fine-print of the terms of use of the AirBnB website state:
“Guests agree that a confirmed reservation is merely a licence granted by the Host [in this case, Uecker and Greaves, the tenants] to the Guest to enter and use the listing for the limited duration of the confirmed reservation … Guests further agree to leave the Accommodation no later than the checkout time that the Host specifies in the Listing … If a Guest stays past the agreed checkout time without the Host’s consent, they no longer have a license to stay in the Listing”.

However their landlord, Catherine Swan, tried to evict them on the basis that they had sublet the apartment without her permission.  Initially, the Victorian Civil and Administrative Tribunal (VCAT) ruled against the landlord, finding that the tenants had given their guests a “licence to occupy”, and that this wasn’t a breach of their lease.

The Supreme Court overturned VCAT’s decision and instead held that the tenants had granted their AirBnB guests “exclusive possession” when they allowed guests to use the entire property.  The guests had full use of the property and there was no evidence that the tenants were able to access the apartment while the guests were using it.  The fact it remained their primary residence or that they could re-enter if the guests overstayed, did not mean it was a licence to occupy. The agreement with the AirBnB guests was instead a sublease, not a licence, and as a result the tenants were in breach of their lease.

This doesn’t mean that AirBnB arrangements are illegal or invalid.  Rather, the decision is a reminder that tenants, whether of residential or commercial properties, need to carefully check their lease before letting others use their premises.

Landlords should consider specifically prohibiting these type of sharing arrangements in their residential leases, and it would be wise to periodically check the AirBnB website to see if your property is listed.

It also means that even if you dress up an agreement as a “licence to occupy”, you may in fact be entering into a lease (particularly if you give the other person exclusive possession of the whole of your property).

If you have any queries or would like further information regarding this article, please contact:

David Shelley
Managing Principal
M: 0427 183 217


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