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Renting with Airbnb or VRBO: Why You Should Think Twice - ThinkstockPhotos-184012177-d-c.jpg

Renting with Airbnb or VRBO: Why you should think twice

*actual size of rental may vary

In the midst of making plans to spend the weekend out of town, it dawned on me, “Hey, I can probably pay significantly less than $200 a night (hotel price) by using Airbnb.” Turns out I was right. I quickly spotted a $79-a-night, one-bedroom apartment in a prime San Diego location and jumped on it. Then I thought, “Hey, I can probably rent out my San Francisco apartment that same weekend to offset some of my travel costs. Heck, I might even be able to turn a profit.” Brilliant, right? Well, maybe not.

After doing a little digging, I discovered (much to my dismay) that renting out my San Francisco apartment for just a few days is illegal. Then, I looked at my lease and found a “no subletting” clause staring me in the face. Double whammy!

So how is everyone renting out rooms on Airbnb and getting away with it? How is it all these people avoiding the dreaded eviction notice? Is it really only for owners who can spare the space?

Well, owners may not have it so easy either. According to Michael Bracamontes, Rocket Lawyer On Call real estate attorney, “If you own an apartment in San Francisco you should know it’s against the law to rent residential spaces for less than 30 days at a time. Violating this law can lead to some stiff penalties — fines of up to $1,000 per day or 6 months in jail. So, my advice to a San Francisco tenant is not to use Airbnb unless you want to risk your tenancy or get caught up in potential litigation.”

Ouch.

Property owners can, however, apply for a Bed & Breakfast License, but it can be costly — and it requires plenty of paperwork, plus hearings concerning zoning laws, and can take a year or more to get approval. Oh, and the taxman wants his cut too; as of late, San Franciscans renting out space through Airbnb are required to pay a 14% hotel tax.

If you’re a renter, you should know that most leases contain a clause prohibiting subletting; so making a buck or two on Airbnb could be a lease-breaker and possible grounds for eviction or legal action against you. It’s also worth mentioning that landlords are getting pretty wise to tenants renting out their places, especially for high-return city events like the Super Bowl, New Year’s Eve, and Mardi Gras. To be fair, it is extremely easy for owners to spot rentals on Airbnb, due mostly to the incredibly detailed descriptions people post, which usually include plenty of high-def pictures of the property.

So what’s Airbnb’s role in all of this? Are they essentially enabling landlords and tenants to break the law? Not exactly. Their policy explicitly states:

“If you’re an Airbnb host, you must make sure of the following:
you have all necessary permissions to offer your accommodations, including ensuring that your hosting activity (i) will not breach any agreements you have entered into with any third parties (such as any agreements or rules with a landlord or HOA) and (ii) will (a) be in compliance with all applicable laws, Tax requirements, and rules and regulations that may apply to your Accommodations, including, but not limited to, zoning laws and laws governing rentals of residential and other properties and (b) will not conflict with the rights of third parties”

Seems pretty clear.

But fear not, every county is unique. Although San Francisco is starting to collect a hefty “hotel tax”, Napa Valley property owners enjoy a pretty lax tax-free perk. After obtaining a vacation rental permit, landlords are allowed to rent out properties for up to 14 days a year without having to pay taxes or even report it to the IRS. That’s Airbnb-friendly, right?

However tempting it may be to rent out your place for a few extra bucks, the bottom line is, you should check your local county and city laws, including zoning and tax codes before making the Airbnb leap. And if you’re a tenant renting out your apartment, check with your landlord and review your lease before putting your space up for profit on Airbnb. Lastly, keep in mind some cities are currently revisiting the laws surrounding temporary rentals, so keep a sharp eye on city hall in the coming months.

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3 Comments

  1. Jackie says:

    hi, thank you for this. i was about to begin using it to offer my apartment in SF and this just changed my mind…

  2. Caroline Garabiles says:

    I know that your article is back in 2012, but I’m wondering if I can host a 1 bedroom in my residential home in American Canyon.

    • Everyday Law Staff says:

      Hi Caroline,

      Thanks for dropping by! This question is a beyond my place to speak so I’d like to connect you with an attorney who can speak to you directly about your situation. Please see this link for more information: http://www.rocketlawyer.com/find-a-lawyer.rl.

      Members of our services can get a free half hour consultation about any new legal matter that they might have. It’s part of the Rocket Lawyer OnCall service. If you decide to hire the attorney we connect you with, we can also get you at least a 40% discount on their hourly rates.

      If your legal situation has been solved, please keep our online services in mind. You can ask a legal question and get a written response, or talk to a lawyer live.

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      We hope everything gets resolved. Best of luck to you!