An Airbnb Cancellation Doesn't Mean It Never Happened

Since 2007, when two young entrepreneurs first began renting out an air mattress in the living room of their rented apartment, the short-term rental platform Airbnb has grown to encompass eight million listings worldwide. Over this period, a host of legal issues arose (such as a shortage of long-term rental units and a steady stream of strangers coming and going in residential buildings), prompting Airbnb itself, various governments, and residential condominium corporations to introduce regulation.

The case discussed in this article, Toronto (City) v. Allison, 2026 ONCJ 205 (CanLII), is a court ruling analyzing Toronto's short-term rental bylaw. At the heart of the dispute was whether the defendant had already been operating a short-term rental business through Airbnb before obtaining official registration and a licence from the City.

Under the City of Toronto Act, 2006 and Chapter 547 of the Toronto Municipal Code, anyone wishing to operate a short-term rental business in Toronto must first apply to Municipal Licensing and Standards (MLS) and obtain a formal registration number. That number must also be displayed in all short-term rental advertisements.

The defendant in this case was a real estate agent. On May 26, 2023, he submitted a short-term rental application to the City in order to rent out his property. He immediately received an automated reply email from the City, stating that his application was "under review," and that the City would only issue a formal Operator Registration Number once the application had been approved. Only after obtaining that number could he legally operate a short-term rental.

However, on that very same day, Airbnb's system showed that a booking for accommodation from May 27 to 29 had already been generated, with funds deposited into the defendant's account. Although the guest ultimately never checked in, and the booking was subsequently cancelled and refunded, the City took the position that the defendant had already been operating a short-term rental business without proper registration, and laid two charges against him: first, operating a short-term rental business without registration; and second, failing to display a valid registration number in his short-term rental advertisement.

In hearing the case, the court first addressed the credibility of the witnesses. The judge found the defendant's testimony to be inconsistent. For instance, on one hand he claimed he had no idea how the booking had come about, and even denied that he had ever actually posted an Airbnb listing; yet on the other hand, he admitted to having spent a considerable amount of time setting up his Airbnb account, taking photos, uploading information, and preparing the unit for rental.

The defendant also made a key admission during cross-examination. When shown the City's email of May 26, he acknowledged that he was, at the time, clearly aware that his application remained "under review" and had not yet been approved for a formal registration number. He further stated that it was precisely for this reason that he immediately contacted Airbnb and the guest to request cancellation of the booking.

The testimony of the enforcement officer provided another key piece of evidence. Upon checking the City's Salesforce system, the officer discovered that the registration number used on Airbnb for the rental property in question did not belong to the defendant, but to a different individual. However, aside from the registration number, all other information — including the address, bank account, and payment details — belonged to the defendant.

In its legal analysis, the court held that setting up an Airbnb account, uploading photos, preparing listing information, accepting bookings, and collecting payment all constitute conduct amounting to operating a short-term rental business. The judge emphasized that the Toronto Municipal Code's definition of a "booking" refers to a commitment reached between a short-term rental operator and a guest regarding an accommodation arrangement; accordingly, once the Airbnb booking was created, that act in itself already constituted the operation of a short-term rental business.

Furthermore, on the argument that the property should not be considered to have been "used" for short-term rental purposes because no guest ever actually stayed there, the court rejected this narrow interpretation. It held that "use" does not necessarily require that an actual stay take place; once an owner has accepted a booking, collected a deposit, and committed to providing accommodation, the property has, in effect, already been put to commercial use. The judge also noted that, in the commercial world, cancelling a transaction is a normal occurrence, and does not mean the transaction never existed.

The court also specifically noted that the Airbnb booking in question was only able to be successfully created because a valid registration number had been entered into the system — it just happened to belong to someone else. The court found that this in fact showed the defendant's conduct was not simply a system error, but rather that a fully functional short-term rental transaction had actually been completed.

The judge noted that, as a real estate agent, the defendant was himself familiar with licensing systems and compliance requirements, and ought to have known all the more clearly that no transaction should be conducted before obtaining a formal registration number. His conduct was therefore all the harder to characterize as reasonable oversight.

Ultimately, the court found the defendant guilty on the first charge — operating a short-term rental business without formal registration. However, on the second charge — failing to display a valid registration number in the advertisement — the court found the charge not proven. This was because the prosecution had never submitted an actual screenshot of the Airbnb listing or historical page evidence, and therefore failed to meet the standard of proof "beyond a reasonable doubt."

The key takeaway from this case is really that, in the digital world, every login, transaction, message, edit, and deletion leaves behind a traceable electronic trail. Technology may delay the discovery of the truth, but it cannot truly erase the facts. Attempting to cover up, deny, or pretend a violation never happened will often only make the evidence more glaring, and ultimately make it impossible to escape the reach of the law.