The Legal Tangles of Airbnb - Rent Week

By the Editorial Department

Photo courtesy of Pietro & Silvia.

It seems like a sound enough business plan. Renting living spaces to strangers for hours or days at a time–what could possibly go wrong?

Airbnb, the startup service that rents people’s private apartments and houses to guests, recently agreed to a major legal transition regarding its operations in New York City. Over the next year, the company is going to hand over all anonymous data from every host around the city to the state attorney general, Eric Schneiderman.

Prior to the recent pivotal announcement, the company battled to guard its users’ data and tried to act as its own authority to ensure that guests respect the law.

Now, the company that seemed to offer a loose platform for the semi-informal economy must comply with investigation efforts by NYC regulators trying to bust illegal apartment rentals.

As the attorney general fought with Airbnb in court for months, city landlords waited impatiently for the outcome. Schneiderman argued that the company’s website went against local law that makes it illegal for people to rent apartments in a 30-day window without the occupants present.

Many landlords are concerned about the liability they may face, such as Airbnb customers falling down stairs in their buildings.

Aside from unexpected accidents, intentionally illicit activities occur in Airbnb apartments. News broke a few weeks ago that prostitutes were using NYC apartments as “pop-up” brothels.

In March, Ari Teaman rented his apartment out to what he thought were normal people, only to discover that guests were actually using his home for a “panty raid orgy” they were advertising online. Teaman later wrote on his Tumblr that he was getting evicted on account of the infamous “XXX Freak Fest.”

Reports of illegal Airbnb incidents have occurred for years throughout many different cities. There was a 2011 case in Oakland, California, in which a man rented his apartment out to a meth addict who used a stolen identity. The guest’s stay resulted in thousands of dollars of damage and there were meth pipes littered everywhere.

By its nature, Airbnb also impacts hotel businesses. Dispute exists over the fact that rentals aren’t subject to the same taxes hotels are required to pay.

A Boston University study published in January examined Airbnb’s impact on hotel rentals in the state of Texas. Crunching numbers over the course of a decade, the researchers determined a baseline estimate of a 1 percent “increase in Airbnb listings in Texas resulting in a 0.05 percent decrease in quarterly hotel revenues,” which was compounded by Airbnb’s rapid growth. The most affected places, researchers wrote, would be lower-end hotels that do not typically host business travelers.

However, these results don’t seem to worry the officials in Reno, Nevada, who apparently do not regard Airbnb with much concern.

Though the illicit stories may stick out, it’s likely that most guests who stay in Airbnb are average people who don’t cause incredible or irreversible damage. The media probably doesn’t care to report the thousands of harmless cases where honeymooners find a cute Airbnb cottage in Hawaii or transplants living in San Francisco rent their parents a quaint apartment in Noe Valley while they visit from the Midwest–since no one would want to read about that.

However, the legal concerns and illicit stories are what tend to stand out to officials in many major cities. It’s possible that the platform will be closed outright in places like New York.

In the mean time, the company is expanding services rather than cutting back. Airbnb is currently testing a new “Experiences” feature that offers services like nature hikes, drink tastings, crafting, and walking tours. They also recently launched a feature to help with last-minute accommodations in California cities.

Though the company has received a lot of bad publicity, rooms anywhere, whether at the Ritz Carlton, in a sublet, within a McMansion or through Airbnb, are subject to tenants and guests performing all types of proper and improper activities.