Legal Issues Associated with Hosting California Properties on Airbnb

A “hosting platform” is an online marketplace that connects property owners with users that are looking for vacation or short-term rentals. Airbnb and VRBO are two of the most commonly used hosting platforms. These hosting platforms are facing many legal issues while many cities begin to implement new regulations and restrictions targeting short-term rentals. 
 
Effective January 1, 2016, Senate Bill 761 requires a hosting platform “to provide a specific notice to an occupant listing a residence for short-term rental on a hosting platform that states, among other things, that, if the occupant is a tenant, listing the room, home, condominium, or apartment may violate the lease or contract and could result in legal action by the landlord, including possible eviction.” The state is beginning to shift the burden on these platforms to warn hosts to check leases and rules before posting their properties on such platforms. However, hosting your homes could still be subject to city and municipal citations, homeowner’s association penalties, and eviction.
 
HOA Limitations and Leases
 

When listing your condo or apartment on hosting platforms, check your HOA’s covenants, conditions, and restrictions (CC&Rs) or bylaws, and if you are a tenant, check with your landlord and your lease to see if such use is permitted. Owner hosts may face large fines and penalties for violating CC&Rs, and tenant hosts may be subject to eviction for breach of lease.
 
In a recent case, Chen v. Kraft, the California Appellate Court affirmed a summary judgment granting possession to the landlord even though the lease gave written permission allowing the tenant to host short-term rentals through Airbnb. The court held that the tenant violated local ordinances that prohibit using a unit for transient occupancy and receiving income from it, therefore, the landlord was entitled to evict based on the tenant’s illegal use of the premises.
 
Municipal Rules on Short-Term Rental
 
California short-term rental laws differ from city to city. While some major cities in California have enacted regulations to address the issues related to short-term rental through hosting platforms, others have not. For example, some cities in Orange County have banned short-term rentals completely Nearby Los Angeles has more relaxed rules by only requiring a business license and transient occupancy tax for hosting on Airbnb.
 
In San Francisco, all hosts are required to follow Ordinance 218-14 designated for regulating short-term rentals. The host must 1) be a permanent San Francisco resident with multi-family of at least 2 units, 2) host only one unit from the owner, 3) register with the city, 4) obtain a business license from the treasurer, 5) obtain liability insurance, 6) have no standing city code violations, 7) pay an application fee, 8) sign an affidavit agreeing to city rental ordinances, 8) submit proof of residency, 9) pay transient occupancy tax, 10) follow rent control regulations, 11) rent out unit for no more than 90 days per calendar year unless owner is also residing in the unit.
 
Hosts should carefully check with local rules or regulations and other contracts to reduce possible legal liability.