Landlords, Tenants Battle Over Vacation Sublets

by | Mar 30, 2015 | Tenant Screening

A New York City landlord reportedly is evicting his tenant for profiting by subletting a rent-controlled apartment to nightly guests.

A similar story appeared last June, after a landlord discovered his tenant was earning more than the capped rent by subletting through the online vacation rental service Airbnb.

tenant screeningVisitors to Vancouver, Toronto and virtually every major city around the world can turn to private rental listing websites like Airbnb to find a room or apartment. These private rentals, which might go for $60 to hundreds of dollars per night in Toronto, offer an alternative to higher-priced hotels and provide a more intimate vacation experience, because many ‘hosts’ remain in the units and serve as tour guides.

In other cases, the tenants move out and sublet the entire rental property full-time to a slew of vacationers on a nightly or weekly basis. Meanwhile, landlords are prohibited from raising the rent.

It appears that tenants are not the only ones cashing in on the profit potential of short-term rentals. New York City Council is fielding a law that would force landlords to pay a $5,000 fine for booting a tenant in favour of short-term rentals, and a tenant in San Francisco recently sued his landlord for bumping him out and then placing the unit on Airbnb.

Recently a housing court in New York City sided with the landlord in a dispute over Airbnb rentals, commenting that it is against the spirit of rent-control to allow a tenant to “double-dip” — earning income by subletting what is supposed to be a primary residence. The couple in that case reportedly earned three times the rent each month from the vacation sublets. Lawmakers in NYC applauded the judge’s decision, where there are an estimated 14,000 illegal vacation rentals.

So what’s the problem with temporary sublets?

For starters, it increases the number of complaints from other tenants who don’t like strangers in the building. But it’s the increased liability that should have landlords on edge.

There is no requirement that the host tenants screen their visitors, and many tenants are not aware of what they need to do to run a tenant background check. What’s more, host tenants may not have the right to run tenant screening reports or perform due diligence on the strangers they invite into the rental property.

Worst-case scenarios have played out, including short-term visitors who committed crimes, or who refused to leave and had to be evicted at the landlord’s expense.

Some landlords are shocked to discover that their rental properties are listed on Airbnb. Finding the listings takes a little detective work. The listing service has been criticized, most notably by prosecutors in New York City, for making it difficult to identify a property by address.

Visitors reviewing a listing may not be aware that the property is a rental or that the host doesn’t have the right to sublet, although Airbnb insists that it discourages clients from breaking the law. Some tenants don’t appear to realize that what they are doing is risky and hurts other¬†residents and the rental property owner.

In the absence of local laws that prohibit short-term rentals, it is wise for landlords to consider their options when it comes to limiting short-term rentals. To the extent the law allows, these options might include revisions to the lease to limit subletting, prohibit utilizing the rental property for a business purpose, beef up eviction rights, and preserve the landlord’s right to run a tenant background check on new occupants.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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