Regulating Home-Sharing Services

Legislators across the country are proposing regulations for home-sharing services like Airbnb and Expedia’s HomeAway, which allow users to rent their properties like hotels. In New York City, for example, Governor Andrew Cuomo is considering signing a bill to fine users of Airbnb $7,500 for advertising their short-term rentals.1 These restrictions on using Airbnb are causing controversy between landlords, tenants, and homeowners. Airbnb warns hosts on the website to understand and abide by contracts that bind the user, such as leases or co-op rules.2 Despite these warnings, however, lawsuits are spawning between buildings and landlords and also between landlords and tenants for claims like operating illegal hotels and breach of lease contracts. Additionally, Airbnb has seen an increase in racial bias allegations where guests are declined reservations based on their race.3

New York and California are two of the more prominent states with legislators threatening the business model of Airbnb and its competitors.4 New York’s pending legislation is in response to New York law, which makes renting an apartment or home for fewer than thirty days illegal.5 According to a report by MYL Legal Service and Housing Conservation Coordinators, New York City had 51,397 listings in 2015 with fifty-six percent of those listings being illegal.6 Airbnb’s General Counsel has since responded with allegations that the New York bill violates the federal Communications Decency Act and the free speech rights under the First Amendment.7

On the opposite coast, Californian legislators are considering a statewide solution to address the cities’ concerns that renters cause complaints and do not pay taxes.8 Airbnb and HomeAway have both initiated complaints against the city of Santa Monica and filed a joint motion for preliminary injunction.9 The spike in short-term rentals in the United States due to Airbnb has inevitably caused the recent regulations on home-sharing.10 To address some of the legal issues arising, Airbnb is committing to automatically collect the occupancy taxes from its hosts in certain markets to pay the city directly.11 On the other hand, some cities have taken it upon their own initiative to pass ordinances that regulate the home-sharing activity. Nashville approved an ordinance requiring the renter to be twenty-one years of age and possess a permit for short-term rentals.12 The ordinance also regulates the number of persons per rental, persons per bedroom, and prohibitions on food services.13

The legal issues presented by home-sharing services are increasing, but the solutions being proposed by cities and Airbnb seem promising for the future of short-term rentals.

  1. Bloomberg News, Airbnb mobilizes users to help fight its battles in New York, Crain’s New York (September 22, 2016), http://www.crainsnewyork.com/article/20160922/TECHNOLOGY/160929960/airbnb-mobilizes-users-to-help-fight-its-battles-in-new-york.
  2. Airbnb, https://www.airbnb.com/terms (last visited Oct. 12, 2016).
  3. See David McCabe, Airbnb Foes Seize on Race Controversy, The Hill (June 9, 2016), http://thehill.com/business-a-lobbying/business-a-lobbying/282801-airbnb-foes-seize-on-race-controversy.
  4. Joel Stashenko and Amanda Bronstad, Airbnb, HomeAway Step Up Battles Against Short-Term Rental Bans in NY and California, Daily Business Review, Sep. 9, 2016.
  5. Id.
  6. avid Li, Majority of City’s Airbnb Rentals Last Year Were Illegal: Report, New York Post (June 28, 2016), http://nypost.com/2016/06/28/majority-of-citys-airbnb-rentals-last-year-were-illegal-report.
  7. Joel Stashenko and Amanda Bronstad, Airbnb, HomeAway Step Up Battles Against Short-Term Rental Bans in NY and California, Daily Business Review, Sep. 9, 2016.
  8. Id.
  9. Id.
  10. Johanna Interian, Note, Up in the Air: Harmonizing the Sharing Economy Through Airbnb Regulations, 39 B.C. Int’l & Comp. L. Rev. 129, 146 (2016).
  11. Id. at 147.
  12. Id. at 148.
  13. Id.

Author: Erica Mannix

Erica Mannix is a 2L at the Newark campus of Rutgers Law School. Erica graduated from New York University in 2011 majoring in Finance and Marketing. Prior to attending law school, she developed her career in technology working for leaders in the industry including Apple Inc. Erica enjoys going to the beach, spending time with her family, and knitting scarves for people in need.