Airbnb, the startup darling and innovator of the peer-to-peer home vacation market, has a history of legal trouble. It all started last year, when a handful of horror stories went viral. Users said they’d had their homes trashed and defiled, information stolen, and complained that Airbnb’s response was less than satisfactory.
But the company stepped up to the plate, issuing a mea culpa heard ‘round the Internet, and increasing security controls. Airbnb also recently introduced its $1 million insurance guarantee, a reassuring effort for all of the renters out there nervous about the threat of damages.
Destroyed homes aside, there are a couple of much bigger problems looming in the shadows for Airbnb – and they start with your landlord and continue on to zoning laws.
Playing the blame game
A recent story from a power Airbnb host detailed how his landlord served him papers for renting out his rented apartment using the site.
This got me thinking about the one and only reason I’ve never signed up to be an Airbnb host. I’ve rented rooms, homes, and even a tugboat-turned-houseboat with the help of the site, with generally very positive experiences. And given that I travel fairly often and live in downtown Portland, Oregon, I’ve considered clicking the site’s prompt to list my apartment several times. What always stopped me is the fact that I don’t own my apartment, and I never could quite believe that it was legal for me to make money off a place that my landlord owns.
Lo and behold, Airbnb’s Terms of Service have some pretty interesting language about this very issue. “Airbnb’s responsibilities are limited to: (i) facilitating the availability of the Site, Application and Services and (ii) serving as the limited agent of each Host for the purpose of accepting payments from Guests on behalf of the Host.”
Alright, so basically what Airbnb is saying is we have this platform, do with it what you will. The marketplace, that’s on us. The activity you create on it, that’s on you.
And there are some more detailed references to landlord-leasee rights:
“You acknowledge and agree that you are responsible for any and all Listings you post. Accordingly, you represent and warrant that any Listing you post and the booking of, or Guest stay at, an Accommodation in a Listing you post (i) will not breach any agreements you have entered into with any third parties and (ii) will a) be in compliance with all applicable laws, Tax requirements, and rule and regulations that may apply to any Accommodation included in a Listing you post, including, but not limited to, zoning laws and laws governing rentals of residential and other properties and b) not conflict with the rights of third parties. Please note that Airbnb assumes no responsibility for a Host’s compliance with any applicable laws, rules and regulations.”
When I reached out to ask Airbnb about illegal subletting, I was pointed back to the TOS. “This is clearly explained in the Terms of Services section on the Airbnb Website,” the company says. “Additionally we remind hosts in our Hosting Manual as well as other FAQs on the site that they need to be compliant with any contracts they have. Most tenants know whether they have the right to sublet their apartment or not; they likely know how their landlord will regard renting on Airbnb.”
There are plenty of property owners using the site to rent out their places. The problem is that, in most cases, renters using the site to host people are breaking their rental agreements. Real estate attorney Joshua Price tells me that the majority of leases have a clause prohibiting subletting – which is, essentially, what Airbnb facilitates – without a landlord’s consent. There are exceptions to this rule, and he mentions that in New York there is a statute giving renters a loophole around such clauses. Airbnb says there are currently no numbers on how many hosts rent or own their properties on the site.
The illegal subletting evolution: From Craigslist to Airbnb
While many renters using Airbnb might be operating outside the law, this is hardly something the Airbnb platform is responsible for. Check any Craigslists apartment and housing section and you’re sure to find a number of people trying to find subletters. The reasons are many: college kids who are going home for the summer and don’t want to fork over the rent while their apartments sit empty (which I’ve done); anyone who decided to fill up that extra room with a new roommate but was too lazy to add them to the lease (also, see me in college); frequent travelers who for some reason like to keep an apartment for the brief intervals between their vacations (unfortunately not me).
The difference is that Craigslist, if you want it to be, is anonymous. You don’t even have to provide your own contact information or any photos, if you really don’t want to. Yes, it’s entirely possible that if your landlord happened upon your post seeking a subletter (the more information you provide, the more likely this is), you could find yourself in hot water. But compared to the plethora of info Airbnb requires from its hosts, Craigslist is a veritable wasteland.
Not only are you encouraged to add as many high-res photos as possible (or take advantage of the professional photography Airbnb can supply), but for safety reasons you need to identify yourself. Which makes total sense: Every time I’ve used Airbnb, I’ve done a decent amount of research on my hosts, making sure I wasn’t going to become a cautionary tale.
Airbnb wants to help its hosts advertise well and make them money, and you can’t fault the company for that. And for all of the property owners using the platform, that’s great – but renters are just giving visibility to their illegal activity. Don’t think your landlord knows about Airbnb? I’d think again: The site has blown up over the last year. It’s not highly likely you’ll get caught, but every day you’re taking a greater risk as the site’s popularity grows. I asked my own landlord what she thought of Airbnb – she loves it and uses it to find vacation rentals all the time. She also tells me, however, that she rents out properties in three different states and all of her contracts contain no subletting agreements.
Landlords are going to (and are beginning to) grow wise to this game and start checking the site for their own properties. And that’s where you can get in trouble.
There are two questions we need to ask here, one of them being more of a stretch than the other. First: Is Airbnb acting as an enabler in all this? The site has provided a platform allowing us to monetize the space we (to varying degrees) live in without putting any language front and center about the fact that we might be breaking the law. Of course, that isn’t Airbnb’s fault exactly. If you choose to rent out your extra bedroom, your landlord sees it, and you get yours, then according to the terms of service, that’s your problem. And there are plenty of online platforms that could be used to break the law. As long as that’s not their intended use, though, it will come back to the user every time.
Still, I find it rather alarming that any notice about your contract with your landlord is buried in the terms of service. Would it kill Airbnb to have a prompt when you try to list your unit, asking what your ownership situation is? The site already has a few available checks and balances front and center, but none of them refer to this specific question.
It’s really easy to blame Airbnb in all this. But that’s analogous to blaming torrent sites for piracy, even though many also host plenty of legal activity. Which raises the second, bigger question: Because it provides the marketplace, is Airbnb responsible for what users are doing there?
I’ve always had a fairly good experience in Airbnb (used it four times as a renter). Mostly it’s establishing communication with the host/guests to make sure they’re a real person and reasonable to get along with so they don’t backfire you later with a bad review or take your security deposit.
Tất nhiên là design hơn rồi. IT là tớ chọn nhầm. Ngày xưa tưởng IT là design.:)
Municipalities and state legislators create code which restricts short-term rentals because tourism is one of the most lucrative tax revenue generators that many states have. People come to town, liberally spend their disposable income on hotels and private home rentals, dining out, recreation, shopping for trinkets, etc. For private homes, using websites like VRBO etc, where many owners are registered with their state and city, (some are, but others are not registered which makes it no diff than if someone does an illegal rental on Craigslist or AirBnB), the state gets its share of tax income on all of it.
For hotels and housing, tourism related taxes are very high, including bed tax, sales and use tax etc, all lumped into it, and tourism housing tax can range from 10.5% (Utah) to 17% (NY), which is bookoo revenue to the state tax commission and municipalities. So, it’s bad enough for a landlord to learn that a tenant is subletting, which invites all sorts of potential trouble that most tenants do not bother to contemplate past the income they can make and the security of their own personal belongings.
And, it’s not fair to hotels and private home owners who also pay big $s to reach out to tourists, to compete with other short term rentals that do not meet the same tax burdens. But what states and cities are concerned about is that every time someone makes an illegal rental, whether it’s thru AirBnB, or Craigslist, or the VRBO’s of the world, and whether it’s for a couch at $25 a night, or an entire property at $250/night, it all translates to direct competition with hotels and registered private homes, and those small bites here and there add up to a big sucking sound of dollars being drained from the legitimate tourism economy. It hurts the hotel’s bottom line, the private homeowner’s bottom line, and the states bottom line.
And then there are the issues of safety and related legalities: hotels and legitimate private rental homes are subject to rigorous safety inspections, and have to meet all the latest safety codes, from smoke detectors to GFI breakers, whereas many private properties not intended for tourism and nightly stays, have grandfathered issues that are not held to the same standards. It’s not good press for a state’s tourism industry to hear news about a family that got killed in a fire or carbon monoxide poisoning at a rental – bad enough if it’s a legal rental, but worse if it’s not. People getting hurt or killed is awful if you have any conscience about these sort of things, and from a tax commission point of view, illegal rental or not, it’s going to be bad for business overall for the state when something goes wrong.
All that said, it’s not reasonable to indict AirBnB, which posts what is righteous, and not righteous use of their site, for the sins of their users. They could do more, ljke ping a notice to the state tax commission every time a room is listed, and the tax com could cross-ref if the person/address is for a registered rental, and ask AirBnB or Craigs etc, not to post any questionable listings until the the legal status is resolved.
Being from Australia, it amazes me how the United States of America says it is the land of the free. However you say that AirBNB is “not fair to hotels and private home owners who also pay big $s to reach out to tourists”.
Living in capitalist and free society like Australia, we are used to the fact that people are free to make money from the assets they own.
Perhaps keitharan if you want state regulation of everything including where people can choose to stay you can move to a country where the state decides for you and the rest of society.
Capitalism is not fair – if you are lazy you will not get ahead !
re JohnK states: “However you say that AirBNB is “not fair to hotels and private home owners who also pay big $s to reach out to tourists”.
That is not what I said. You misquote, and misunderstanding, and misrepresent my comments. I was referring to people who misuse AirBnB.
I recommend you re-read the last paragraph where I say: it’s not reasonable to indict AirBnB, which posts what is righteous, and not righteous use of their site, for the sins of their users.
Not looking to wander off topic or for a debate about freedoms, capitalism, but good luck with all that.
cậu thik IT hay Design hơn hả HoZu
I have never used Airbnb myself, but in college I did sublet my apartment one summer – I asked my landlord and he OK’d it. I did know and trust the the person I was subletting to, so it wasn’t a stranger. Honestly, I’m surprised there aren’t more horror stories from Airbnb – having said that, the idea of subletting via Craigslist and other sites has been around for a long time, so it’s already an established practice. Does Airbnb have some kind of peer review system, where you can comment on how awesome/terrible a guest was? That’d be one way to take some pressure off the system. That way, if someone had a bunch of great reviews, you’d be more likely to let them stay. Also gives people an incentive to leave the place in the condition they found it in.
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BEWARE!! Airbnb is really bad when it comes to how hosts are treated by the Guests. If we see guests smoking weed or do bad things in your home, airbnb wont come to help in getting him move out. Instead, airbnb allow kicked out guests to put bad reviews even it is his bad. I removed all my listings from airbnb for safety and happiness.
cậu thik IT hay Design hơn hả HoZu
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As experienced airbnb host, I think that it’s not 100% ethical to sublease when your lease, as a renter, doesnt allow you to do so. However the possible profit prospect is quite high and the game is worth a play. Best situation – to have a landlord who’s ok with it, but that, as we know, is not easy. I have been evicted from a few apartments, have a few that are operating stable, and rethinking the strategy. Possible return is very high and we will find a way around. There are quick fixes of course, like not providing exact address in the listing, listing it under a friend’s name, booking them for a month (on paper) to comply with the law etc, but that still doesnt solve the bigger problem.
People are renting their apartments. People will be. They’ll get evicted. New tenants will do it again. It’s a circle. I dont think making it a crime is an answer. then we’ll just have more organized crime.
I pay taxes. Tens of thousands. if not airbnb and sites alike, I would be on food stamps now, after all, I started renting my apartment after my employer where I worked for 8 years was forced to close the business during 2008 meltdown.
Hi Alexander. I am a landlord, and there are very good reasons why I don’t allow sublets at my property. Over my 20 years of being a landlord, I’ve had at least 5 tenants do sublets without notice to me, and 4 of those 5 times have led to disastrous and costly results for me. If you’ve been evicted a few times, then you understand that the relationship between landlords and tenants is a business relationship to your landlord, and that as a tenants you ave limited rights as to how a rental property can be used. And, while you have come up with some creative ways around the short term rental laws, at the end of the day, even when a landlord holds a hefty deposit, most still do not want tenants to sublet for good reasons There are valid and credible legal and safety reasons (read my reply above to the general editorial by Molly McHugh – she missed the mark altogether). In addition to the tax and other issues I note in my commentary, there are also issues about renting sex offenders and criminals, damages etc that may exceed the amount of an avg deposit, and all of these are things 99% of tenants who choose to sublet do not take into account. This is one of many reason landlords do background checks. Just imagine if you sublet your apartment and the person moving in was not actually on vacation, and decides to move in full time. Try explaining that to your landlord. And then they squat at the property for up to a year in some states (ie Calif). While you have moved on and sacrificed your deposit, your landlord is stuck with a nightmare for months or longer, and loss of rental income, and damaged property. So the landlord suffers, and neighbors suffer, while the original tenant walks away relatively unharmed despite being responsible for all of it by breaching a lease. This is just one of many examples I’ve seen over the hears. And, most landlords, even apartment complex owners, are not wealthy land barons, even apartment owners, but average hard working people who saved nickels to put a down payment on a place, and rely on rental income to make their mortgage payment.