Source: https://www.ashleypetersonlaw.com/sharing-space-ashley-peterson/
Timestamp: 2019-04-21 14:22:07+00:00

Document:
To counteract the impact on long-term rental availability various jurisdictions are restricting the ability of homeowners and tenants to offer short-term vacation rentals.
The concept of blindly renting a room, an apartment, or an entire house to a complete and utter stranger for a day, a week, a month or longer would have been unthinkable until several years ago. However, as the hospitality industry has evolved from traditional hotels and motels to home-sharing rentals, landlords, homeowners, communities, and local and state governments now face the issue of whether a tenant or owner has a right to engage in short-term rentals and, if so, how the duties and obligations associated with that right should be defined.
The evolution is reflected in the fact that “Airbnb’s global inventory grew from 3,000 units in February 2009 to 2.3 million units—houses, condos, apartments—in 2016….”1 In financial terms, Airbnb generated $340 million in revenue during the third quarter of 2015 based on bookings of $2.2 billion, and the number of nights booked that quarter increased from 11.3 million the previous year to 23.8 million.2 Given these circumstances, the legal issues associated with home-sharing rentals are hardly inconsequential.
Today, this innovative concept created not only by Airbnb, but also VRBO and Home Away (collectively, hosting platforms), enable property owners and tenants to offer their apartments or homes for rent on the hosting platforms for a sum and on terms described on their individual postings. Hosting platforms charge a fee on every booking arranged through their websites by acting as middlemen. No background checks are performed on hosts or guests who use the companies’ websites. Hosting platforms only require that a user provide a valid email, phone number, or active Facebook, Google, or LinkedIn account. Hosting platforms do not conduct in-home inspections to verify whether a home is safe or sanitary nor do they confirm that the host owns the property or has authority to rent it.
The latter presents an immediate legal issue with short-term rentals in which there is a landlord-tenant relationship. Since hosts are not required to be the actual property owner, tenants with a valid lease may sublease their units to hosting platform guests without the landlord’s consent or knowledge, provided there is no prohibition against assignment or sublease in their leases.
As hosts, tenants and property owners must also be cognizant that the rental of properties falls outside the scope of most renter and homeowner insurance policies. Since hosts do not generally have commercial liability insurance, they need to be concerned about coverage when accidents and property damage occur with guests. In late October 2015, Airbnb began offering host protection insurance, which provides hosts with commercial liability coverage in an amount up to $1,000,000 per occurrence per policy year for third-party claims for bodily injury or property damage arising during an Airbnb stay.6 This coverage is subject to a per-location limit of $1 million with an aggregate limit of $10 million; however, this coverage ex­cludes acts arising from of assault and battery, sexual abuse or molestation, loss of earnings, personal advertising injury, fungi or bacteria, Chinese drywall, communicable diseases, acts of terrorism, product liability, pollution, or asbestos, lead or silica.7 Home Away and VRBO do not yet provide commercial liability coverage for hosts using their websites.
The difficulties that the court in Roberts experienced in striking this balance apply equally to short-term rental guests. On the one hand, a host maintains and cleans the unit and fixes the fee regardless of the number of occupants. Conversely, a guest is given the keys and exclusive right of access, and rents the property for less than 30 days.
Given these competing circumstances, a question exists whether a guest who exclusively rents an entire property from a host for less than 30 days is a lodger or a tenant. A lodger is considered a mere licensee who is granted a nonexclusive right to use and occupy a portion of the premises while the owner maintains primary control and right of access like a hotel. Lodgers who stay for periods of less than 30 days are not generally afforded the same protections granted to tenants11 and are required to pay transient occupancy taxes.12 Thus, a short-term rental guest who rents a single room in an owner-occupied dwelling for less than 30 days would likely be considered a lodger under Civil Code Section 1946.5.
If a guest does not leave, the host would be within his or her rights to have the lodger arrested for trespassing under Penal Code Section 602.3, provided the lodger is given the required notice under Code of Civil Procedure Section 1162. However, it must be noted that Section 602.3 only applies in situations where a single guest rents a room in an owner-occupied dwelling. If there are multiple guests or the guest rents the entire unit, this right to oust a guest without notice would not apply.
In contrast to a lodger, a tenant has an exclusive right to possession of the premises for a specified term which is typically 30 days or more. Tenants generally pay rent and maintain the premises. A tenant has all the rights and protections granted under Civil Code Sections 1940 et seq. The host would likely be obligated to ensure that termination notices are properly served on the guest in accordance with the Civil Code even if there is no formal lease and the stay is less than 30 days. If a homeowner is forced to evict the guest, the hosting platform will not reimburse legal fees incurred by the homeowner or cover the loss of use during lengthy eviction proceedings.
Unless the legis­lature elects to enact a statute establishing a clear line between a lodger and tenant in short-term vacation rentals, the present circumstances may lead to inconsistent outcomes and create uncertainty as to what actions hosts must take to remove an unwanted person from their home.
Short-term vacation rentals present other significant issues for both local government and the legislature. A key issue is the conflict between the current lack of inventory of rental properties available for long-term tenants and how that shortage is exacerbated by the conversion of units into vacation rentals. Beach cities and major metropolitan areas like Los Angeles, Palm Springs, San Diego, and San Francisco are particularly desirable locations for these vacation rentals. Many property owners are now converting their long-term rentals into short-term ones because of the opportunity to earn greater fees from the latter. This is particularly true for homeowners who have high mortgage payments and who could use additional rental income to help cover their mortgages.
Within the last year or two, other major cities have begun to follow Palm Springs in enacting new restrictions on vacation rentals. Santa Monica, for example, adopted the Home-Sharing Ordinance, effective in June 2015.20 This ordinance distinguishes between two types of short-term rentals—home sharing and vacation rentals.21 “Home sharing” is defined as the rental of a room in a host’s home to a guest for a period of less than 30 days while the host remains in possession of the property.22 A “vacation rental” is defined as the exclusive rental of an entire residential property to a guest for periods of less than 30 days.23 Under the ordinance, home sharing is permitted but vacation rentals are not. Also, hosting platforms are held responsible if they allow hosts to list their properties on the website without complying with the city registration and tax requirements.24 Violations of this ordinance by hosts and hosting platforms can result in fines of up to $250 per occurrence, or a misdemeanor punishable by a fine of $500 or imprisonment of up to six months in jail.25 To enforce this ordinance, the City of Santa Monica requires the hosting platforms to regularly disclose each listing located in the city, the name and address of each host with a listing, the length of the stay, and the fee paid for each stay.26 Finally, neighbors may report any violations to the city code enforcement.
Airbnb has taken two actions to respond to these legislative initiatives. The first is adopting a policy in San Francisco and New York named “One Host, One Home.”30 Ac­cording to Airbnb, it is removing listings of hosts who violate this requirement.31 Also, Airbnb has filed legal actions challenging the validity of the ordinances adopted by San Francisco, Santa Monica, and Ana­heim and the statute enacted by New York in federal courts.32 Airbnb alleges these laws violate the First and Four­teenth Amend­ments to the U.S. Consti­tution because they impose an impermissible content-based regulation on commercial speech and criminal liability without proof of mens rea.33 Airbnb claims that the cities cannot show that the ordinances are narrowly tailored to achieve a substantial governmental objective and that the ordinances impose civil and criminal penalties on hosting platforms for unlicensed listings without any requirement that those platforms have knowledge of the property’s status. Further, Airbnb argues that these ordinances violate the 1996 Com­munications Decency Act (CDA) by re­quiring Airbnb to monitor, review, and verify content associated with third-party rental advertisements and that by imposing criminal and civil liability on Airbnb to comply with the ordinance treats Airbnb as the publisher or speaker of third-party content.
The proposed Los Angeles ordinance follows Santa Monica’s lead by allowing home-sharing for less than 30 days with certain restrictions but completely bans vacation rentals. Under the proposed law, home-sharing would be limited to a maximum of 120 days each year; require hosting platforms to disclose the host name, length of stay, and price paid for each booking; and completely disallow the use of residential apartments for short-term rentals.44 These new laws may help increase the number of properties that could be available for long-term tenants, as well as appease neighborhood groups who have strongly opposed vacation rentals in residential zones.
Hosting platforms have dramatically chang­ed how people think about travel by providing guests with the comforts of home at competitive prices. Hosts also benefit by having a new source of income. Although many positive effects exist from home sharing, homeowners, tenants, neighbors, hosting platforms, and local and state governments will need to work together to navigate the unanticipated consequences and legal ramifications of this relatively new service. While the initial response to home sharing by certain cities has been to enact more restrictive laws, the likelihood is that there will be an evolution within the next few years towards creating a more symbiotic relationship between each of these constituencies through the adoption of laws that balance their respective interests.
2 Rolfe Winkler, Airbnb Raises over $100 million as it Touts Strong Growth, Wall St. J. (Nov. 20, 2015), available at http://www.wsj.com.
3 Bus. & Prof. Code §§22590, 22592, 22594.
4 Bus. & Prof. Code §22590.
6 Host Protection Insurance, https://www.airbnb.com /host-protection-insurance (last visited Nov. 25, 2016).
8 Roberts v. Casey, 36 Cal. App. 2d Supp. 767 (1939); Edwards v. City of Los Angeles, 48 Cal. App. 2d 62 (1941).
9 Roberts, 36 Cal. App. 2d Supp. at 772.
14 Palm Springs, Cal., Mun. Code §5.25.075.
15 Palm Springs, Cal., Mun. Code ch. 5.25.
16 Palm Springs, Cal., Mun. Code §5.25.40(a).
17 Palm Springs, Cal., Mun. Code §§5.25.40, 5.25.60.
18 Palm Springs, Cal., Mun. Code §5.25.075(c).
20 Santa Monica, Cal., Mun. Code ch. 6.20.
21 Santa Monica, Cal., Mun. Code §6.20.010.
24 Santa Monica, Cal., Mun. Code §6.20.030.
25 City of Santa Monica, Overview of the Home Sharing Ordinance, available at https://www.smgov.net (last visited Nov. 25, 2016).
26 Santa Monica, Cal., Mun. Code §6.20.050.
27 S. 6340-A, Jan.-June 2016 Leg. (N.Y. 2016) [hereinafter S-6340-A].
28 N.Y. Mult. Dwell. Law §4.8.
29 S-6340-A, supra note 27.
30 Airbnb v. San Francisco, No. 3:16-cv-03615-JD (N.D. Nov. 8, 2016) (order granting preliminary in­junction); see also Kia Kokalitcheva, Here’s How Airbnb Says It’s Curbing Illegal Hotels in San Francisco, Fortune (October 11, 2016), available at http://fortune.com.
33 Ivan Penn, Airbnb Sues Santa Monica Over Short-Term Rental Ban, L.A. Times (Sept. 2, 2016), available at http://www.latimes.com.
39 Carolyn Said, Airbnb, Under The Gun, Is Ready To Cooperate With SF, S.F. Chronicle (Nov. 14, 2016), available at http://www.sfchronicle.com.
40 L.A., Cal., Mun. Code ch. I, art. 2, §12.03.
41 L.A., Cal., Mun. Code §§12.08, 12.21; Chen v. Kraft (2016) 243 Cal. App. 4th Supp. 13, at 21.
44 Los Angeles Department of City Planning Recom­mend­ation Report, available at http://planning.lacity .org/ordinances/docs/HomeSharing/StaffRept.pdf.
45 Rev. & Tax. Code §7280.
46 L.A., Cal., Mun. Code ch. II, art. 1.7.
47 Information provided to author in client telephone conversations regarding being audited.
-airbnb-available. (last visited on Nov. 25, 2016).

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