If you are stuck in such a situation, here is what to do.

Mr. Alok Verma owns a beautiful apartment in a cooperative housing society located in the bustling city of Navipur, within the state of Aryavarta. To supplement his income, he considers listing his apartment on “StayNest,” a popular online platform for short-term rentals. However, he is uncertain about the legal framework governing such activities. He worries whether this would violate the society’s rules or any specific state laws. This situation is common for many property owners in India who wish to leverage their assets but are caught in a legal grey area between property rights and community living regulations.

Advice in such cases

If you are a property owner considering short-term rentals, proactive steps can prevent future legal disputes.

• Review your society’s bye-laws thoroughly. This is the primary document that governs the use of your property. Look for any clauses that restrict commercial activities, subletting, or non-residential use.
• It is highly advisable to obtain a No Objection Certificate (NOC) from your housing society’s managing committee before you start. This can preemptively resolve most potential conflicts.
• Use a clear and comprehensive rental agreement for your guests. This contract should outline the terms and conditions of their stay, including rules about noise, guest numbers, and use of common facilities.
• Always comply with the mandatory police verification requirements. For all guests, especially foreign nationals, you must submit the required information (such as Form C) to the local police station or Foreigners’ Regional Registration Office (FRRO).
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The legality of short-term rentals in a residential society is not governed by a single act but by a combination of laws and regulations:

• The respective State’s Cooperative Societies Act: For Mr. Verma, the Aryavarta Cooperative Societies Act and the society’s registered bye-laws are the most crucial legal documents. These bye-laws, which are legally binding on all members, often specify that flats are for residential use only. If a society’s bye-laws prohibit commercial activity, they can be used to stop short-term rentals.
• The Indian Contract Act, 1872: This law governs the agreement between you (the host) and your guests. A well-drafted contract with clear terms and conditions is legally enforceable, protecting you from potential liabilities.
• Registration of Foreigners Act, 1939: If you host foreign guests, you are legally obligated to submit their details in Form C to the relevant authorities. Failure to comply is a punishable offense.
• Local Municipal Laws: Many city municipalities are now framing policies for homestays and short-term rentals. These may require you to obtain a license, pay commercial property tax, or adhere to specific health and safety standards.
• Rent Control Act: These acts are typically designed for long-term tenancies and do not apply to transient stays or license agreements used for short-term rentals on platforms like StayNest.

If you are the complainant

If you are a resident or a managing committee member of a society where a member is running a short-term rental that is causing issues, you can take the following steps:

• Cite the Bye-Laws: The first step is to issue a formal notice to the flat owner, citing the specific bye-law that prohibits commercial or non-residential use of the apartment.
• Document Nuisance: Keep a detailed record of any disturbances caused by the short-term guests, such as excessive noise, security breaches, or strain on common resources like water and parking. Photographic or video evidence can be helpful.
• Escalate to the Registrar: If the member does not comply after receiving a notice from the society, the managing committee can file a formal complaint with the Registrar of Cooperative Societies, who has the authority to adjudicate such disputes.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

If you are the property owner facing opposition from your society for running a short-term rental, here is how you can defend your position:

• Examine the Bye-Laws Closely: If the bye-laws do not explicitly prohibit short-term stays or define them as “commercial activity,” you may have a strong case. Ambiguity in the rules can be argued in your favour.
• Engage in Dialogue: Proactively communicate with the managing committee. Assure them of the measures you are taking to vet guests, maintain security, and prevent any nuisance to other residents.
• Cite Legal Precedents: In some cases, Indian courts have observed that letting out a residential property for temporary lodging does not necessarily amount to commercial activity, especially if it is not run like a full-scale hotel or guesthouse. This can be a point of legal argument.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The police generally do not interfere in civil disputes between a society and its members regarding the use of a flat. Their involvement is limited to criminal matters. They will intervene if:

• There is a complaint of nuisance, illegal activities, or criminal behaviour by the guests.
• The property owner fails to comply with the mandatory police verification norms for tenants and guests (especially foreign nationals).

In essence, as long as there is no breach of law and order, the police will direct the parties to resolve the matter through the society’s internal mechanisms or civil courts.

FAQs people normally have

• Can my housing society legally ban me from using my flat for short-term rentals?
  Yes. If the society’s registered and approved bye-laws contain a clear clause restricting the use of flats for commercial, hotel-like, or non-residential purposes, they can enforce this ban.
• Do I need a special license to run a short-term rental?
  This depends on your city and state. Some states and municipalities have introduced “Homestay” or “Bed & Breakfast” policies that require registration and a license. It is crucial to check the local municipal regulations in your area.
• Is the income I earn from these rentals taxable?
  Absolutely. Any income earned from renting out your property, whether short-term or long-term, is taxable under the Income Tax Act, 1961. It should be declared either as “Income from House Property” or “Profits and Gains from Business or Profession,” depending on the scale and nature of your operations.

What evidence is required?

For the property owner, key evidence includes property ownership documents, copies of the rental agreements with guests, and any written communication with the society (such as an NOC application). For the society (the complainant), the most important evidence is the registered bye-laws, minutes of managing committee meetings discussing the issue, and documented proof of any nuisance caused by guests, such as written complaints from other residents, photos, or videos.

How long will the investigation take?

This is not a police investigation. A dispute of this nature is a civil matter. If handled internally by the society, it may take a few weeks to a few months to resolve. If the matter is escalated to the Registrar of Cooperative Societies, the process can take several months. If a party decides to file a suit in a civil court, the resolution could take several years.

Advocate Sudhir Rao, Supreme Court of India