The Ugly Side of Short-Term Rentals

A few of my clients rent all or part of their homes through short-term rental companies like Airbnb. They say it’s a good way to supplement their income, especially if they live in desirable neighborhoods like the Mission, Haight, or South of Market.

As I have written in previous blogs, as a tenant, you need to read your lease to ensure you can use your home as a short-term rental. Otherwise, you are opening up the possibility of an eviction.

Other Risks

But there are other risks involved. The more you know, the more you can make a sound judgement about whether renting all or part of your home as a short term rental is right for you.

SFGate reported on August 23rd about a scam that’s becoming increasingly common in the Bay Area. Burglars book a place and cancel at the last minute. Then, knowing the rental will be empty, they burglarize it. According to SFGate, police arrested a man who had done the same to a Mountain View apartment through Airbnb recently.

The article quoted Airbnb spokesman Nick Shapiro, who stated that Airbnb would cover losses to the homeowner under the company’s “$1 million host guarantee.”

Sounds good? Well, like many things, you might need to take a closer look.

There Can Be an Ugly Side

The website www.airbnbhell.com has been featured in a number of sources, including MSN, USA Today, and Vanity Fair. The site features stories of people who have had a terrible time with Airbnb. Obviously, its name says it all. These are the hellish stories.

I don’t know how much they verify the stories that people write in. But as I read what people wrote, I asked myself if this could happen to one of my clients?

The website was started by Dan Weber, who had his own bad experience with Airbnb. A couple had rented his Los Angeles condo for six months, and then two nights before the end of the term, they left suddenly. They reported to Airbnb that there were mice in the condo, and based on Airbnb’s policy, the company refunded the couple 50% of the fee, or about $3,000. When Weber tried to contact the company, he had no success. Even after he showed Airbnb that the couple’s photo of a mouse was used elsewhere on the web two years before their complaint.

Rules for Hosts

Here’s the top five rules from Airbnbhell.com if you are a host renting to Airbnb residents:

1. If your guests claim any sort of insect/pest/vermin problem, Airbnb will instantly return 50% of your guests’ money for their entire reservation, even if it’s a yearlong reservation and the claim is false.
2. If your guests steal your cash or other difficult-to-prove assets, Airbnb will do nothing.
3. If you make any request regarding damage to reclaim part or all of the security deposit, Airbnb will demand receipts for your original purchase even if it’s furniture you’ve owned for 20 years. If you don’t have receipts, you’re out of luck, and even if you do, it will take weeks or months to get any resolution.
4. If you wait more than 24 hours to make a claim regarding damage from guests, your claim will be denied by default.
5. Airbnb takes 3% of every reservation from you, but they also take about 15% from the guest. That means your guests are WILLING to pay 18% more than you’re actually receiving but you’re not getting any of that extra money.

The website has other rules, including skepticism about the $1,000,000 guarantee.

And if you’re a guest…

Here’s the Number One rule if you are a guest at an Airbnb home: If any of your personal items, cash, or valuables are stolen (by the host, other guests, or burglars) you have no protection from Airbnb. This could apply to any short-term rental, because the theft of these items are difficult to prove.

Airbnb in San Francisco

Airbnb filed a federal lawsuit in June to fight the recently passed San Francisco legislation requiring hosts to register with the City. According to US News and World Reports, the company is arguing the San Francisco ordinance violates federal law that has protected websites like Facebook and YouTube from being responsible for information posted by its users. In this case, it’s the legality of vacation listings.

Vivek Krishnamurthy of the Cyberlaw Clinic at Harvard Law School told US News and World Reports that the lawsuit “is going to be the first of many kinds of legal battles around the platform economy….At some point governments are going to have to be able to regulate these things.”

In the meanwhile, you need to informed if you are thinking of renting part or all of your home as a short-term rental.

Have you received a notice you’re being evicted because of subletting for a short-term rental or even a long-term one? Are you worried that your landlord will give you notice? You should consider seeking the help of an experienced tenant attorney to learn about your tenant’s rights.

Know your rights. Protect yourself.