Airbnb is one of the biggest startup success stories to come out of San Francisco in years, and yet it and other similar short-term rental services have been engaged with the city in a legal battle in federal court since last summer over stringent new legal requirements set in place last year. The lawsuit brought by Airbnb and HomeAway to invalidate the municipal laws will be dropped, however, contingent on the successful implementation of a settlement agreement reached between the two companies and the city, pending approval by city agencies. The settlement may well be a sign of things to come in how urban localities regulate real estate in an industry disrupted by the rapid change brought on by internet-based services such as Airbnb and HomeAway.
Why the Short-Term Regulations Were Enacted
San Francisco had enacted new short-term rental regulations last year in response to concerns about thousands of property owners operating as unregulated hotels, thereby cutting into amount of properties available to local residents while acting as a drain on city resources and penalizing those property owners in the short-term rental market who do comply with city business registration requirements. Airbnb and HomeAway had raised legal concerns in part due to the fact that those companies themselves would be penalized by the city based on the failure of members using their services to register with the city, including up to $1,000 in fines per illegal listing.
What the Short-Term Rental Settlement Accomplishes
Under the settlement reached with the city, Airbnb and HomeAway will, within 120 days, require members listing rentals in San Francisco to obtain business registrations with the city before they are able to post listings on their sites. The sites will then be required to share user information with the city to promote ongoing compliance with city requirements.
These requirements include placing a cap on the number of days certain types of residences may be used for rental, limiting the rental of the space to permanent owners, and limiting owners to one listing. As of the date of the settlement, over 8,000 listings for San Francisco were available on the sites while only 2,100 entities had registered with the city.
Work With an Experienced Los Angeles Real Estate Attorney
At Wagenseller Law Firm in downtown Los Angeles, our attorneys have extensive experience in resolving all types of real estate litigation matters. Contact the Wagenseller Law Firm today to schedule a consultation to discuss your matter.