o_19gkhsc3tqcq1s2tc0d1a3jup8a.pdf

COMMERCIAL FORUM
short-term Rentals:
more Risks than Rewards
LIABILITY
If we dig a little deeper, the next logical landing spot for
liability might be the renter’s insurance; however, the
“commercial purpose” clause included in most policies
probably means they will not cover the injured guest. In this
case, the odds are possible that liability could potentially land
on the landlord’s plate. If you plan to allow your tenants to
use Airbnb, please make sure you pay close attention to
these ongoing policy changes.
So I know what some of you are thinking: Why don’t I, the
landlord, just place my vacant units on Airbnb directly to
better mitigate liability and earn the profits myself? Good
question, but the risks remain.
In the age of apps, C2C business is more prevalent
than ever. Services like Uber and Lyft have cut out the
middleman to provide easier and more efficient ways
of doing business. The housing market has its own services like
Airbnb and Couchsurfing. But did you know these services could
put landlords at risk?
New York City officials estimate three-quarters of all Airbnb
rentals in the city are illegal, violating zoning or other laws,
with commercial operators supplying more than one-third
of the units and generating more than one-third of the
revenue. The scale has gotten so large that New York City has sued
the owners of two buildings for essentially running illegal hotels.
The extra income sounds nice, but at the cost of added scrutiny,
violations and lawsuits - you may want to take the pragmatic
approach and simply forbid short-term sublets in your lease. Many
Chicago landlords, myself included, already have.
Airbnb defines itself as a trusted community marketplace for people
to list, discover and book unique accommodations around the world;
whether it is a villa for a month, or an apartment for a night.
Chris Pezza
Sales & Leasing Manager
Rockwell Partners, LLC
Generally speaking, an individual property owner uses the service to
find short-term renters looking for vacation housing at a price more
affordable than nearby hotels.
Having used Airbnb, I can say it is a fabulous service and an
affordable way to stay in a luxury beach house in California for a
few nights. But as a landlord myself, I also understand the inherent
problems. It is possible that you currently have a tenant within your
portfolio subletting his or her apartment to a stranger, at a profit,
unbeknownst to you.
One woman in New York reportedly rented five different properties
from five different landlords, and used them as Airbnb rentals to
make significant profits. One of her five landlords had a strong lease,
and was actually able to evict her once he found out about the illegal
sublets. Disaster averted for that landlord.
The liability for a landlord does not stop at just having illegal renters.
What happens if one of these guests is injured during his or her
stay? Airbnb now includes up to $1 million in coverage, but this is
only secondary insurance.
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