Airbnb.com is a website that allows vacationers to find rooms in private homes in major cities around the world. So far, the business model has been a raging success.
But it hasn’t come without significant controversy. Airbnb has been targeted by local government officials over lost tax revenues, and landlords find themselves at odds with tenants who are profiting by using the rental property as an asset.
A landlord in Montreal brought the issue to light this month by reporting that when she checked on one of her rentals, she found strangers living there, and her tenants nowhere to be found. Such is the saga that landlords face when tenants discover the hidden income potential of using a site like Airbnb to convert an extra room or sofa into a revenue stream.
Many local governments regulate short-term rentals. Tenants using Airbnb have run afoul of these rules, most notably in New York City, where landlords and tenants alike face fines for allowing rentals under 30 days.
Moreover, other tenants voice grave concern over their safety when they find strangers sharing the hallways and elevators of otherwise secured buildings.
Hosts themselves have run into problems with the service. One woman reported that, after leaving her guest alone in the apartment, he stole her passport, credit cards and computer equipment.
In a recent case in California, the guests refused to leave when promised, and per landlord tenant law there, had to be formally evicted.
While tenants feel they have the right to earn extra income through subletting, many fail to grasp the landlord’s concern over the increased risks nightly sublets create. Damage may not be covered by ordinary insurance policies, and utility costs for additional occupants on a nightly basis can skyrocket.
The underlying concern stems from the lack of tenant screening. Where traditional tenants undergo a thorough tenant background check, with temporary rentals, hosts have less time or incentive to dig into the renter’s qualifications. Unfortunately, the risk of damage or injury remains high.
While most landlords oppose the practice of nightly sublets, the dilemma is determining whether they have the right to stop it. Short-term leasing may not be specifically covered in a standard lease agreement, and the typical guest policy may not be applicable. However, the lease may allow a landlord to evict the tenant for breaking the law, damaging the property or placing others at risk. The practice may be considered a commercial use of the property where the lease may limit the use to residential only.
Some tenants have argued that it is their legal right to sublet, although that is likely not the case. Local laws may prohibit short-term rentals, or require the tenant to acquire a business permit. It is likely tenants would owe taxes on the income they generate. These factors might allow a landlord to shut it down.
Currently, host tenants can provide listings in apartments without publicly disclosing the street address, which makes it far more difficult for landlords to discover what their tenants are up to. These issues are being debated in venues around the world, but it may be some time before there’s any final resolution.
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.