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No Protection In Airbnb Case

Tenant damage and Airbnb are hot topics. In this issue, we discuss a recent Tenancy Tribunal decision involving both.

By: Property Investor Team

30 April 2019

You’d be hard pressed to come up with a ruling made by the New Zealand court system that is more universally loathed by landlords than the infamous Osaki decision.

Back in 2016, the Court of Appeal handed down a decision on the drawnout out proceedings of Holler & Rouse v Osaki, which left residential landlords liable for accidental damage caused by tenants. The aftermath of the ruling, which included an equally controversial Tenancy Tribunal practice note on tenant liability of damage, served to tilt the scales further against landlords. This means the issue of tenant responsibility for damage to rental properties remains a fraught one. And the spectre of Airbnb holds the potential to complicate things further. That’s why a recent Tenancy Tribunal decision that involves both tenant damage and Airbnb is well worth a look.

In Tobin v Chen [2019], the case revolved around chattels that were found to be either damaged or missing at the end of two tenancies involving the same landlord and tenant.

This situation arose because the landlord rented two apartments that she owns to the tenant. However, the tenant didn’t live at either apartment, instead he used them as Airbnb rentals - with the approval of the landlord.

At the end of both tenancies, a number of chattels were discovered to be either damaged or missing. Both parties accept that the only party(ies) responsible would have been the tenant’s Airbnb sub-tenants. While the landlord had both apartments insured, the policies did not cover any losses incurred through Airbnb use.

That prompted the landlord to file an application with the Tribunal asking for compensation from the tenant for the damage and missing items. The Tribunal considered whether the tenant complied with their obligations at the end of the tenancy and whether he was responsible for the damage.

For guidance the Tribunal looked to the Osaki precedent. This holds that a landlord must prove that damage to the premises occurred during the tenancy and is more than fair wear and tear, while the tenant must prove they did not carelessly or intentionally cause or permit the damage. Further, tenants are liable for the actions of people at the premises with their permission.

In this case, the Tribunal found that the landlord had more than adequately proved the damage, her loss and the amounts claimed. It also found the tenant was liable for all damages caused by his Airbnb sub-tenant.

That was because the landlord’s insurance policies specifically excluded losses incurred during any Airbnb occupancy. The Osaki protection was not afforded to the tenant in this case. Instead he was ordered to pay the landlord $2,325.75 compensation immediately.

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