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APRIL 2015<br />

<strong>The</strong> <strong>risks</strong> <strong>of</strong> <strong>be<strong>in</strong>g</strong> a <strong>host</strong> <strong>in</strong><br />

<strong>the</strong> shar<strong>in</strong>g-<strong>economy</strong><br />

A look at short-term rentals and <strong>the</strong> liability<br />

and public-policy problems <strong>the</strong>y present<br />


<strong>The</strong> “shar<strong>in</strong>g <strong>economy</strong>” is <strong>in</strong> full<br />

sw<strong>in</strong>g <strong>in</strong> <strong>the</strong> San Francisco Bay Area; <strong>in</strong>deed,<br />

<strong>in</strong> many countries around <strong>the</strong><br />

world. Due to advances <strong>in</strong> technology,<br />

Web-based and mobile apps give <strong>in</strong>dividuals<br />

<strong>the</strong> ability to turn dormant <strong>in</strong>vestments<br />

like cars and houses <strong>in</strong>to<br />

money-generat<strong>in</strong>g assets. <strong>The</strong>se<br />

platforms and apps allow companies<br />

to monetize <strong>the</strong>se assets and for<br />

consumers to operate bus<strong>in</strong>esses and<br />

generate <strong>in</strong>come by shar<strong>in</strong>g everyth<strong>in</strong>g<br />

from rides and cars, to rooms<br />

and houses. While <strong>the</strong>re are benefits to<br />

creat<strong>in</strong>g efficiencies <strong>in</strong> <strong>the</strong> marketplace,<br />

<strong>the</strong>re are also significant <strong>risks</strong><br />

and harms. <strong>The</strong>se <strong>risks</strong> are too <strong>of</strong>ten<br />

ignored by <strong>the</strong> major players <strong>in</strong> <strong>the</strong><br />

shar<strong>in</strong>g-<strong>in</strong>dustry, many <strong>of</strong> whom appear<br />

will<strong>in</strong>g to flaunt <strong>the</strong> law while<br />

embrac<strong>in</strong>g <strong>the</strong> mantra “it is better to<br />

beg forgiveness than to ask permission.”<br />

A prime example <strong>of</strong> <strong>the</strong> implementation<br />

<strong>of</strong> technology <strong>in</strong> <strong>the</strong> shar<strong>in</strong>g<br />

<strong>economy</strong> is <strong>in</strong> <strong>the</strong> home-shar<strong>in</strong>g sector.<br />

Companies such as AirBnB, Homeaway,<br />

VRBO and Flipkey have grown quickly<br />

by creat<strong>in</strong>g platforms to facilitate homeshar<strong>in</strong>g<br />

while generat<strong>in</strong>g revenues from<br />

<strong>the</strong>ir customers and <strong>the</strong> communities <strong>in</strong><br />

which <strong>the</strong>y operate. In some <strong>in</strong>stances,<br />

<strong>the</strong> companies appear to acknowledge<br />

that <strong>the</strong> short-term rentals <strong>the</strong>y facilitate<br />

are not allowed <strong>in</strong> certa<strong>in</strong> jurisdictions.<br />

Until recently some platforms even<br />

Copyright © 2015 by <strong>the</strong> author.<br />

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APRIL 2015<br />

refused to pay taxes that had been assessed<br />

aga<strong>in</strong>st <strong>the</strong>m. While cities like<br />

San Francisco have made efforts to regulate<br />

<strong>the</strong>se bus<strong>in</strong>esses <strong>in</strong> recent months,<br />

<strong>the</strong> proposed regulations place <strong>the</strong> bulk<br />

<strong>of</strong> <strong>the</strong> responsibility for compliance and<br />

<strong>the</strong> penalties for violations on <strong>the</strong> <strong>in</strong>dividual<br />

<strong>host</strong>.<br />

<strong>The</strong> <strong>risks</strong> <strong>of</strong> room-shar<strong>in</strong>g<br />

<strong>The</strong> <strong>risks</strong> created by transform<strong>in</strong>g a<br />

home <strong>in</strong>to a hotel can be significant.<br />

Some <strong>of</strong> <strong>the</strong> <strong>risks</strong> and effects <strong>in</strong>clude <strong>in</strong>adequate<br />

<strong>in</strong>surance coverage, nuisance,<br />

premises liability, and a <strong>host</strong> <strong>of</strong> community<br />

impacts. In o<strong>the</strong>r words, homeshar<strong>in</strong>g<br />

can have a detrimental impact<br />

on <strong>the</strong> <strong>in</strong>dividual unit or build<strong>in</strong>g that is<br />

<strong>be<strong>in</strong>g</strong> “shared” as well as on o<strong>the</strong>r tenants,<br />

neighbors and on <strong>the</strong> neighborhood,<br />

city, and county <strong>in</strong> which <strong>the</strong><br />

“home-shar<strong>in</strong>g” takes place.<br />

• Insurance<br />

A major problem caused by rent<strong>in</strong>g<br />

one’s home or apartment for short term<br />

rentals is that most <strong>in</strong>surance policies<br />

are <strong>in</strong>validated by <strong>the</strong> use <strong>of</strong> residential<br />

property for a commercial purpose. <strong>The</strong><br />

same is likely true <strong>of</strong> us<strong>in</strong>g one’s car for<br />

Uber or Lyft. 1 This <strong>in</strong>validation <strong>of</strong> <strong>in</strong>surance<br />

is not surpris<strong>in</strong>g s<strong>in</strong>ce <strong>the</strong> operation<br />

<strong>of</strong> a commercial enterprise is<br />

contrary to <strong>the</strong> purpose <strong>of</strong> a homeowner’s<br />

policy or renter’s policy. <strong>The</strong>se<br />

issues have been widely covered by news<br />

outlets like <strong>the</strong> New York Times, and <strong>the</strong><br />

stories document tales <strong>of</strong> <strong>in</strong>dividual<br />

<strong>host</strong>s that were ei<strong>the</strong>r denied coverage<br />

or dropped by <strong>the</strong>ir <strong>in</strong>surance company<br />

altoge<strong>the</strong>r. 2<br />

While some <strong>of</strong> <strong>the</strong> platforms attempt<br />

to provide solutions <strong>in</strong> <strong>the</strong> form<br />

<strong>of</strong> secondary coverage, a review <strong>of</strong> <strong>the</strong>ir<br />

guidel<strong>in</strong>es appears to make it very difficult<br />

to obta<strong>in</strong> any recovery <strong>in</strong> <strong>the</strong> event<br />

<strong>of</strong> serious damages. Typically coverage<br />

is only triggered for damages above and<br />

beyond <strong>the</strong> <strong>host</strong>’s policy limits, or when<br />

<strong>the</strong> primary <strong>in</strong>surance provider denies<br />

<strong>the</strong> <strong>host</strong>’s claim. It is still unclear<br />

whe<strong>the</strong>r <strong>the</strong> platforms’ <strong>in</strong>surance policies<br />

will provide any coverage if and<br />

when a serious catastrophe happens<br />

such as fire, flood or o<strong>the</strong>r damage.<br />

• Quiet enjoyment <strong>of</strong> residents and<br />

neighbors<br />

Civil Code section 1955 provides:<br />

[O]ne who leases personal property<br />

must deliver it to <strong>the</strong> lessee, secure<br />

his or her quiet enjoyment<br />

<strong>the</strong>re<strong>of</strong> aga<strong>in</strong>st all lawful claimants,<br />

put it <strong>in</strong>to a condition fit for <strong>the</strong> purpose<br />

for which he or she leases it. . . .<br />

Civil Code section 1927 provides:<br />

An agreement to let upon hire<br />

b<strong>in</strong>ds <strong>the</strong> letter to secure to <strong>the</strong> hirer<br />

<strong>the</strong> quiet possession <strong>of</strong> <strong>the</strong> th<strong>in</strong>g hired<br />

dur<strong>in</strong>g <strong>the</strong> term <strong>of</strong> <strong>the</strong> hir<strong>in</strong>g, aga<strong>in</strong>st<br />

all persons lawfully claim<strong>in</strong>g <strong>the</strong> same.<br />

Not only are landlords obligated to<br />

provide quiet enjoyment to <strong>the</strong>ir tenants,<br />

but <strong>the</strong> tenants who rent <strong>in</strong> a build<strong>in</strong>g<br />

have an expectation <strong>of</strong> quiet<br />

enjoyment. This expectation is based <strong>in</strong><br />

part on <strong>the</strong> expected use <strong>of</strong> a limited<br />

number <strong>of</strong> residents. Rent<strong>in</strong>g out one’s<br />

unit on a platform transforms a build<strong>in</strong>g<br />

<strong>in</strong>to a hotel, with a constant stream <strong>of</strong><br />

visitors with <strong>the</strong> attendant noise and disruption<br />

that accompanies <strong>the</strong>m.<br />

This rent<strong>in</strong>g is directly counter to <strong>the</strong><br />

expectations and protections that longterm<br />

renters have <strong>of</strong> <strong>the</strong>ir homes. Additionally,<br />

<strong>in</strong> rent-controlled build<strong>in</strong>gs,<br />

many <strong>of</strong> <strong>the</strong> renters are elderly or disabled<br />

and <strong>the</strong>se disruptions have a<br />

greater effect on <strong>the</strong>m. As with every situation,<br />

<strong>the</strong>re is a balanc<strong>in</strong>g, and home<br />

sharers are not entitled to place <strong>the</strong>ir <strong>in</strong>terest<br />

<strong>of</strong> mak<strong>in</strong>g money ahead <strong>of</strong> all<br />

o<strong>the</strong>rs who have an <strong>in</strong>terest <strong>in</strong> liv<strong>in</strong>g <strong>in</strong><br />

an apartment build<strong>in</strong>g ra<strong>the</strong>r than a<br />

hotel.<br />

•<strong>The</strong> <strong>in</strong>herent conflict with rent control<br />

Short-term rentals <strong>in</strong> residential<br />

units <strong>of</strong>ten run afoul <strong>of</strong> long-stand<strong>in</strong>g<br />

zon<strong>in</strong>g ord<strong>in</strong>ances and laws <strong>in</strong>tended to<br />

preserve affordable hous<strong>in</strong>g and o<strong>the</strong>r<br />

neighborhood characteristics. In many<br />

cities around <strong>the</strong> country, short-term<br />

rentals <strong>of</strong> residential units are prohibited.<br />

For <strong>in</strong>stance, <strong>in</strong> San Francisco and<br />

New York it is generally illegal to rent a<br />

residential unit for tourist or transient<br />

use. <strong>The</strong> purpose <strong>of</strong> <strong>the</strong>se laws is to protect<br />

one <strong>of</strong> <strong>the</strong>se cities’ most scarce resources<br />

– residential hous<strong>in</strong>g.<br />

<strong>The</strong> short-term rental market, however,<br />

is lucrative and <strong>of</strong>ten more appeal<strong>in</strong>g<br />

to landlords than rent<strong>in</strong>g to longterm<br />

tenants who are entitled to rent<br />

control, just-cause evictions, and relocation<br />

benefits. As a result many <strong>host</strong>s<br />

choose to rent to short-term visitors<br />

ra<strong>the</strong>r than to tenants on a long-term<br />

basis. This <strong>in</strong>creas<strong>in</strong>gly common decision<br />

results <strong>in</strong> <strong>the</strong> removal <strong>of</strong> <strong>the</strong>se units<br />

from <strong>the</strong> hous<strong>in</strong>g stock. Many <strong>of</strong> <strong>the</strong>se<br />

units are <strong>in</strong> rent-controlled apartments<br />

which creates fur<strong>the</strong>r harm s<strong>in</strong>ce <strong>the</strong><br />

units are no longer available to lowerand<br />

moderate-<strong>in</strong>come <strong>in</strong>dividuals.<br />

<strong>The</strong> loss <strong>of</strong> affordable hous<strong>in</strong>g<br />

stock could not have come at a worse<br />

time as rental prices are at <strong>the</strong>ir historical<br />

high <strong>in</strong> <strong>the</strong> Bay Area. A recent<br />

position paper by <strong>the</strong> San Francisco<br />

Apartment Association (SFAA) put it<br />

starkly: “In 2013, we lost more hous<strong>in</strong>g<br />

to travel websites than to every o<strong>the</strong>r<br />

type <strong>of</strong> eviction comb<strong>in</strong>ed.” 3 Much is<br />

<strong>be<strong>in</strong>g</strong> done by local governments to<br />

address <strong>the</strong>se problems and <strong>the</strong> platforms<br />

are <strong>be<strong>in</strong>g</strong> asked to assist <strong>in</strong> <strong>the</strong><br />

process. Unfortunately, most have chosen<br />

to stay silent on <strong>the</strong>ir broader impact<br />

on local communities, while<br />

significant hous<strong>in</strong>g stock cont<strong>in</strong>ues to<br />

be lost.<br />

As discussed below, San Francisco<br />

recently passed an amendment to <strong>the</strong><br />

Adm<strong>in</strong>istrative Code, dubbed <strong>the</strong><br />

“AirBnB Law,” that allows limited<br />

rentals, but places <strong>the</strong> bulk <strong>of</strong> <strong>the</strong> tax<br />

and legal responsibility on <strong>host</strong>s. Worse<br />

yet, <strong>the</strong> law has no real enforcement<br />

mechanism, while allow<strong>in</strong>g <strong>the</strong> <strong>host</strong><strong>in</strong>g<br />

platforms to cont<strong>in</strong>ue to collect revenue<br />

streams from short-term rentals that<br />

violate <strong>the</strong> law.<br />

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APRIL 2015<br />

• Nuisance<br />

A public or private nuisance <strong>in</strong>volves<br />

a substantial and unreasonable<br />

<strong>in</strong>terference. (People ex rel. Gallo v. Acuna<br />

(1997) 14 Cal.4th 1090, 1105.) What<br />

constitutes nuisance cannot be determ<strong>in</strong>ed<br />

by any fixed general rule; it depends<br />

upon <strong>the</strong> facts <strong>of</strong> each particular<br />

case, such as nature <strong>of</strong> <strong>the</strong> use, <strong>the</strong> extent<br />

and frequency <strong>of</strong> <strong>the</strong> <strong>in</strong>jury, <strong>the</strong> effect<br />

upon <strong>the</strong> enjoyment <strong>of</strong> health and<br />

property, and o<strong>the</strong>r similar factors. <strong>The</strong><br />

gravity <strong>of</strong> <strong>the</strong> harm must be weighed<br />

aga<strong>in</strong>st <strong>the</strong> utility <strong>of</strong> <strong>the</strong> defendant’s<br />

conduct. (Shields v. Wondries (1957) 154<br />

Cal.App.2d 249, 255.) Liability for nuisance<br />

does not h<strong>in</strong>ge on whe<strong>the</strong>r <strong>the</strong> defendant<br />

owns, possesses, or controls <strong>the</strong><br />

property, nor on whe<strong>the</strong>r <strong>the</strong>y are <strong>in</strong> a<br />

position to abate <strong>the</strong> nuisance; <strong>the</strong> critical<br />

question is whe<strong>the</strong>r <strong>the</strong> defendant<br />

created or assisted <strong>in</strong> <strong>the</strong> creation <strong>of</strong> <strong>the</strong><br />

nuisance. (County <strong>of</strong> Santa Clara v. Atlantic<br />

Richfield Co. (App. 6 Dist. 2006)<br />

137 Cal.App.4th 292. rehear<strong>in</strong>g denied,<br />

review denied.)<br />

Many local and state rules prohibit<br />

<strong>the</strong> operation <strong>of</strong> a bus<strong>in</strong>ess <strong>in</strong> contravention<br />

<strong>of</strong> zon<strong>in</strong>g and plann<strong>in</strong>g codes.<br />

Operat<strong>in</strong>g a bus<strong>in</strong>ess without a<br />

proper permit <strong>in</strong> a prohibited zone<br />

could be considered negligence per se.<br />

Whe<strong>the</strong>r <strong>the</strong> use <strong>of</strong> one’s apartment or<br />

home as a short-term rental constitutes<br />

a nuisance is actively <strong>be<strong>in</strong>g</strong> analyzed<br />

and litigated. At first glance, chang<strong>in</strong>g<br />

<strong>the</strong> use <strong>of</strong> an apartment or home <strong>in</strong>to a<br />

commercial enterprise could constitute<br />

both a private and public nuisance due<br />

to <strong>the</strong> effect on <strong>the</strong> o<strong>the</strong>r occupants and<br />

neighbors. Lawsuits have been filed <strong>in</strong><br />

San Francisco concern<strong>in</strong>g this very issue.<br />

• Safety concerns<br />

Short-term rentals can create several<br />

safety concerns for property owners<br />

and neighbors. For example, short-term<br />

renters are <strong>of</strong>ten unknown and barely<br />

screened. <strong>The</strong>se short-term renters can<br />

create nuisances, <strong>in</strong>flict <strong>in</strong>juries, and<br />

damage property. In many <strong>in</strong>stances,<br />

those rent<strong>in</strong>g out <strong>the</strong> units throw parties<br />

and <strong>in</strong>vite additional guests. With a constant<br />

stream <strong>of</strong> additional <strong>in</strong>dividuals <strong>in</strong><br />

<strong>the</strong> build<strong>in</strong>g who do not have any longterm<br />

ties to <strong>the</strong> unit, break-<strong>in</strong>s and<br />

o<strong>the</strong>r <strong>the</strong>fts may occur.<br />

Additionally, <strong>in</strong> states that reta<strong>in</strong><br />

<strong>the</strong> traditional common law division <strong>of</strong><br />

visitors to land <strong>in</strong>vitee, licensee, and<br />

trespasser, <strong>the</strong> short-term renters are<br />

likely considered “<strong>in</strong>vitees” to <strong>the</strong> property,<br />

which implies that <strong>the</strong> owner or<br />

possessor has taken reasonable steps to<br />

assure <strong>the</strong> safety <strong>of</strong> <strong>the</strong> premises. It is<br />

<strong>of</strong>ten uncerta<strong>in</strong>, however, whe<strong>the</strong>r <strong>the</strong><br />

premises are actually safe. What happens<br />

when <strong>the</strong> <strong>in</strong>vitee who booked <strong>the</strong><br />

unit br<strong>in</strong>gs <strong>the</strong>ir own <strong>in</strong>vitees back to<br />

<strong>the</strong> unit? <strong>The</strong> answers are unclear, but<br />

<strong>the</strong> ultimate risk falls on homeowners,<br />

landlords, and tenants, who are generally<br />

ill-equipped to deal with this type <strong>of</strong><br />

responsibility.<br />

Fur<strong>the</strong>rmore, it is not only tenants<br />

and o<strong>the</strong>r occupants <strong>of</strong> a build<strong>in</strong>g who<br />

compla<strong>in</strong> about <strong>the</strong> constant stream <strong>of</strong><br />

guests that rent units through <strong>host</strong><strong>in</strong>gplatforms.<br />

Neighbors also express significant<br />

concern about a hotel or bed<br />

and breakfast spr<strong>in</strong>g<strong>in</strong>g up <strong>in</strong> <strong>the</strong>ir<br />

neighborhood because <strong>the</strong>se establishments<br />

cause <strong>in</strong>creased traffic and noise.<br />

Local government response to<br />

home-shar<strong>in</strong>g platforms<br />

In an October 2014 report, <strong>the</strong> New<br />

York State Attorney General found that<br />

most <strong>of</strong> <strong>the</strong> short-term rentals booked <strong>in</strong><br />

New York City violated state and local<br />

laws that prohibit residential rentals <strong>of</strong><br />

less than 30 days unless <strong>the</strong> landlord or<br />

tenant lives <strong>in</strong> <strong>the</strong> same unit dur<strong>in</strong>g <strong>the</strong><br />

rental period. 4 <strong>The</strong> report also stated<br />

that commercial units accounted for a<br />

disproportionate share <strong>of</strong> short-term<br />

rentals by volume and revenue, with 94<br />

percent <strong>of</strong> <strong>host</strong>s <strong>of</strong>fer<strong>in</strong>g at most two<br />

units and <strong>the</strong> rema<strong>in</strong><strong>in</strong>g 6 percent <strong>of</strong><br />

<strong>host</strong>s <strong>of</strong>fer<strong>in</strong>g hundreds <strong>of</strong> units each. All<br />

<strong>of</strong> this resulted <strong>in</strong> <strong>the</strong> loss <strong>of</strong> thousands <strong>of</strong><br />

potential residential units <strong>in</strong> New York<br />

City and millions <strong>in</strong> potential tax dollars<br />

from transient occupancy taxes.<br />

As a result <strong>of</strong> <strong>the</strong> report, AirBnB<br />

removed some <strong>host</strong>s from its Website.<br />

AirBnB’s opponents, however, claim that<br />

thousands <strong>of</strong> additional prohibited <strong>host</strong>s<br />

have s<strong>in</strong>ce appeared on <strong>the</strong> site. Though<br />

AirBnB is violat<strong>in</strong>g New York laws and<br />

displac<strong>in</strong>g thousands <strong>of</strong> long-term residential<br />

units, <strong>the</strong> New York City Council<br />

is still <strong>in</strong> <strong>the</strong> process <strong>of</strong> determ<strong>in</strong><strong>in</strong>g how<br />

to regulate <strong>the</strong>se rentals.<br />

Home-shar<strong>in</strong>g platforms faced similar<br />

issues <strong>in</strong> Portland, Oregon. In July<br />

2014, <strong>the</strong> Portland City Council approved<br />

<strong>the</strong> legalization <strong>of</strong> limited short-term<br />

rentals where residents rent out one or<br />

two bedrooms <strong>in</strong> <strong>the</strong>ir homes after receiv<strong>in</strong>g<br />

a permit from <strong>the</strong> Portland Bureau <strong>of</strong><br />

Developmental Services. <strong>The</strong> permit is<br />

granted after a payment <strong>of</strong> $178, an <strong>in</strong>spection<br />

<strong>of</strong> <strong>the</strong> home, and notification to<br />

<strong>the</strong> <strong>host</strong>’s neighbors. To protect aga<strong>in</strong>st<br />

<strong>the</strong> loss <strong>of</strong> long-term rental hous<strong>in</strong>g, permits<br />

are not issued to entire homes. In<br />

January 2015, Portland was <strong>the</strong> first city<br />

to add teeth to its home-shar<strong>in</strong>g law. In<br />

response to <strong>the</strong> sparse compliance with its<br />

regulations, Portland added a $500<br />

penalty per violation that can be levied<br />

aga<strong>in</strong>st ei<strong>the</strong>r <strong>the</strong> <strong>host</strong>, <strong>the</strong> platform, or<br />

both. Whe<strong>the</strong>r that will be effectively and<br />

actively enforced, however, rema<strong>in</strong>s to be<br />

seen.<br />

San Francisco’s response to<br />

<strong>the</strong>se violations <strong>of</strong> local laws mirrors<br />

Portland’s <strong>in</strong>itial efforts, and, like those<br />

efforts, lacks an effective penalty provision<br />

for non-compliance. San Francisco<br />

passed an ord<strong>in</strong>ance <strong>in</strong> October 2014<br />

to legalize limited short-term <strong>host</strong><strong>in</strong>g.<br />

<strong>The</strong> new law legalizes vacation rentals <strong>in</strong><br />

private homes. Hosts must register <strong>in</strong><br />

person with <strong>the</strong> San Francisco Plann<strong>in</strong>g<br />

Department and may only rent out an<br />

entire home for n<strong>in</strong>ety days a year, assum<strong>in</strong>g<br />

<strong>the</strong> <strong>host</strong> lives <strong>in</strong> <strong>the</strong> unit for <strong>the</strong><br />

rema<strong>in</strong>der <strong>of</strong> <strong>the</strong> year. Rentals are unlimited<br />

for <strong>in</strong>dividual rooms <strong>in</strong> a house<br />

Copyright © 2015 by <strong>the</strong> author.<br />

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APRIL 2015<br />

where <strong>the</strong> <strong>host</strong> lives year-round.<br />

<strong>The</strong> law also requires <strong>host</strong>s to display<br />

<strong>the</strong>ir city registry numbers on <strong>the</strong>ir onl<strong>in</strong>e<br />

list<strong>in</strong>gs, though <strong>the</strong>re is no enforcement<br />

mechanism <strong>in</strong> place.<br />

Host<strong>in</strong>g-platforms have no responsibility<br />

to monitor <strong>the</strong> post<strong>in</strong>gs and face<br />

no penalties for violations. To date only<br />

about 130 <strong>host</strong>s out <strong>of</strong> <strong>the</strong> 5,000 list<strong>in</strong>gs<br />

<strong>in</strong> San Francisco have set up appo<strong>in</strong>tments<br />

to register with <strong>the</strong> San Francisco<br />

Plann<strong>in</strong>g Department. <strong>The</strong> Plann<strong>in</strong>g<br />

Department has not yet been able to<br />

develop a process to enforce <strong>the</strong> law<br />

aga<strong>in</strong>st <strong>host</strong>s and Websites that cont<strong>in</strong>ue<br />

to <strong>of</strong>fer rentals without <strong>the</strong> proper<br />

registration.<br />

Shar<strong>in</strong>g <strong>the</strong> burden<br />

<strong>The</strong> “shar<strong>in</strong>g <strong>economy</strong>” is a<br />

big <strong>in</strong>dustry with powerful allies. Companies<br />

like AirBnB and Homeaway are<br />

capitalized <strong>in</strong> <strong>the</strong> billions <strong>of</strong> dollars and<br />

many debate how <strong>the</strong>se companies have<br />

used <strong>the</strong>ir contributions to fur<strong>the</strong>r <strong>the</strong>ir<br />

bus<strong>in</strong>ess. This is why piecemeal regulations<br />

with illusory enforcement mechanisms<br />

fail to go to <strong>the</strong> heart <strong>of</strong> <strong>the</strong><br />

problem, which lies <strong>in</strong> large part with<br />

<strong>the</strong> <strong>host</strong><strong>in</strong>g platforms <strong>the</strong>mselves.<br />

In <strong>the</strong> absence <strong>of</strong> effective legislative<br />

action, <strong>the</strong> <strong>Hooshmand</strong> Law Group<br />

has filed class-action lawsuits aga<strong>in</strong>st<br />

AirBnB and Homeaway for violations <strong>of</strong><br />

<strong>the</strong> San Francisco adm<strong>in</strong>istrative code<br />

and state law. <strong>The</strong> lawsuits allege that<br />

short-term rental Websites know<strong>in</strong>gly<br />

and actively facilitate short-term rentals<br />

<strong>in</strong> prohibited areas <strong>the</strong>reby remov<strong>in</strong>g<br />

scarce hous<strong>in</strong>g from <strong>the</strong> already depleted<br />

hous<strong>in</strong>g market. <strong>The</strong> compla<strong>in</strong>ts<br />

seek to address both categories <strong>of</strong> risk<br />

posed by <strong>the</strong>se <strong>host</strong><strong>in</strong>g platforms – prohibited<br />

short-term rentals and potential<br />

dangers to homeowners and neighbors.<br />

<strong>The</strong> lawsuits target <strong>the</strong>se short-term<br />

rental Websites, alleg<strong>in</strong>g that <strong>the</strong>ir level<br />

<strong>of</strong> participation <strong>in</strong> <strong>the</strong> process while<br />

<strong>be<strong>in</strong>g</strong> aware <strong>of</strong> <strong>the</strong> extent <strong>of</strong> <strong>the</strong> problem<br />

is significant. <strong>The</strong> lawsuit claims<br />

that <strong>the</strong>se websites could easily filter out<br />

<strong>the</strong> prohibited list<strong>in</strong>gs and ensure compliance<br />

with local hous<strong>in</strong>g ord<strong>in</strong>ances.<br />

Conclusion<br />

Despite its allure, home shar<strong>in</strong>g<br />

poses significant <strong>risks</strong> to all <strong>in</strong>volved.<br />

Hosts are not adequately protected due<br />

to <strong>the</strong> lack <strong>of</strong> adequate <strong>in</strong>surance. Landlords<br />

are at risk to <strong>the</strong> extent <strong>the</strong>y are<br />

aware <strong>of</strong> <strong>the</strong> activity and do not act<br />

quickly to address it. O<strong>the</strong>r tenants and<br />

neighbors are affected by <strong>the</strong> noise and<br />

disruption <strong>the</strong> rentals cause. What is<br />

necessary is a smart and comprehensive<br />

approach to address<strong>in</strong>g <strong>the</strong> <strong>risks</strong> and<br />

concerns caused by short-term rentals.<br />

Mark <strong>Hooshmand</strong><br />

is a partner with <strong>the</strong><br />

<strong>Hooshmand</strong> Law Group,<br />

a tenant and consumer<br />

rights litigation and class<br />

action firm. <strong>Hooshmand</strong> has<br />

over 15 years <strong>of</strong> experience<br />

<strong>Hooshmand</strong><br />

represent<strong>in</strong>g clients <strong>in</strong> consumer<br />

matters, tenant matters and bus<strong>in</strong>ess<br />

litigation. Contribut<strong>in</strong>g to <strong>the</strong> article: Ian<br />

Hansen, Stephanie Foster, Tyson Redenbarger,<br />

Eric Kim, and Id<strong>in</strong> Kashefipour;<br />

associates with <strong>the</strong> <strong>Hooshmand</strong> Law Group.<br />

Endnotes<br />

1<br />

Carolyn Said, “Leaked transcript shows Geico’s stance<br />

aga<strong>in</strong>st Uber, Lyft” SFGate (November 23, 2014).<br />

2<br />

Ron Lieber, “A Liability Risk for Airbnb Hosts” New York<br />

Times (December 5, 2014); Ron Lieber, “<strong>The</strong> Insurance Market<br />

Mystifies an Airbnb Host” New York Times (December 19,<br />

2014); Jason Notte, “This Is How Much Insurance You’ll Need<br />

Before Rent<strong>in</strong>g Out a Vacation Home” Ma<strong>in</strong> Street (March 6,<br />

2015).<br />

3<br />

“SFAA Position Paper: Short-Term Rental Websites and <strong>the</strong><br />

Illegal Conversion <strong>of</strong> Our Residential Rent-Controlled Hous<strong>in</strong>g<br />

Stock”, available at: http://www.sfaa.org/pdf/SFAA-Position-<br />

Paper-Short-Term-Rentals.pdf.<br />

4<br />

Eric T. Schneiderman, “Airbnb <strong>in</strong> <strong>the</strong> city” (October 2014),<br />

available at: http://www.ag.ny.gov/pdfs/Airbnb%20report.pdf.<br />

<br />

Copyright © 2015 by <strong>the</strong> author.<br />

For repr<strong>in</strong>t permission, contact <strong>the</strong> publisher: www.pla<strong>in</strong>tiffmagaz<strong>in</strong>e.com 4

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