Posted Apr 25, 2014 10:59 pm CDT
When one of his roommates moved out of the three-bedroom, $2,900-a-month Brooklyn apartment they shared, Chris Dannen needed to do something quick to make up for the lost rent.
So he began offering short-term rentals to travelers through the popular website Airbnb. The bookings and cash started coming fast. When his other roommate left a few months later, Dannen rented a second room through Airbnb. Business got so good that he bought hotel-quality sheets for his guests.
In less than a year, Dannen says, he earned nearly $20,000 renting to Airbnb guests from around the world at an average of $65 a night. Then one day there was a knock on his door. A man handed him a restraining order from his landlord, demanding that Dannen stop renting out rooms. The package included a printout of Dannen’s Airbnb profile, along with customer reviews.
Dannen, a senior editor at FastCompany Digital in New York, wound up being evicted 10 days later. He grudgingly accepted that under the terms of his lease, his landlord had the right to evict him for not following the rules by seeking permission each time he got new “roommates.”
But beyond the terms of the lease, Dannen and tens of thousands of others who are renting rooms through Airbnb and other websites operate in a murky area of the law that’s receiving greater scrutiny and creating controversy. At issue is whether those who rent rooms should be subject to the same kinds of regulations and taxes as hotels and bed-and-breakfasts.
Airbnb is a San Francisco-based company that matches travelers seeking affordable accommodations with people who have rooms for rent. The company, launched in 2008, claims to reach more than 34,000 cities in 192 countries.
While Airbnb is careful to inform its users that they’re responsible for complying with local laws, as well as checking their leases and conferring with condo and co-op boards, that hasn’t prevented a host of conflicts.
New York Attorney General Eric Schneiderman served Airbnb with a subpoena last October in an effort to investigate whether Airbnb hosts were avoiding occupancy taxes by operating illegal hotels. The subpoena asked for the tax information and addresses of those who rented out their apartments in New York City, which amounts to about 15,000 people.
Airbnb sought to quash the subpoena, calling the request “unreasonably broad” and a “government-sponsored fishing expedition.” The subpoena also prompted the Electronic Frontier Foundation and the Center for Democracy & Technology to support Airbnb with an amicus brief, taking the view that “legal processes targeting online intermediaries as a means to get to information about their users en masse raises pronounced privacy concerns.”
Click here to read the rest of “Guest Wrong” from the April issue of the ABA Journal.