Someone Else’s Home For The Holidays: Legal Issues Surrounding Short-Term Online Rentals

As a chill creeps into the air and pumpkin-spice-anything abounds, it’s time to consider your holiday season travel plans and the inevitable question: where will you bunk down during the holidays? Option 1: stay with family. But cramped quarters often lead to familial squabbles, leaving little time to decompress. Option 2: book a hotel. Hotels, however, get pricey around the holidays, often provide even less space than staying with relatives, and need to be booked months in advance.

Enter a third option: short-term vacation rentals of apartments, condos or homes from owners registered with online providers, like Airbnb. With many choices, consumers can get the vacation experience for less; with the added bonus of amenities such as kitchen or outdoor space. Alternatively, perhaps you’re looking to make some cash this holiday by renting your residence. Media sources reported that during Pope Francis’s September visit, a one-bedroom apartment in Philadelphia reached as high as $10,000, while townhomes in the suburbs went for $15,000 for the weekend.

While seemingly attractive alternatives to hotels, there are myriad concerns, both legal and practical with online short-term rentals. Before packing that suitcase or uploading your home as an accommodation, consider the following:

How it Works

While Airbnb gets the most press, other websites offer homeowners the ability to rent to short-term guests, including homestay.com, VRBO.com, flipkey, roomarama, and yes, even Craigslist. The process is similar to searching for a hotel, but sites offer the choice of renting the “entire place”, a private room, or even a shared space, meaning your host might be present during your stay. Payments are through a secure payment portal.

…during Pope Francis’s September visit, a one-bedroom apartment in Philadelphia reached as high as $10,000… a weekend.

Hosts must list the details of the home they seek to rent, set up a payment portal, and agree to terms and conditions. Normally, the fee to list rentals is tied to the desired rental fee. Some sites guarantee that hosts only need accept bookings if 100% comfortable with the proposed guest. Unlike a traditional lease, however, anonymous individuals can search and reserve rooms, while providing minimal background information.

Nearly all sites have refund policies for guests who suffer a “Travel Issue”. As defined by Airbnb, Travel Issues include cancellations, inaccuracies regarding size of accommodation, non or malfunctioning amenities, inability to access accommodations, and unsanitary conditions. Taking advantage of such refund policies, however, is not as simple as buzzing the hotel front desk or yelling downstairs to mom. Unhappy guests must not only submit claims within 24 hours (including evidence and photographs), but refunds are completely final and within the discretion of the company.

Having reservations about the short-term rental world? It’s a good idea to review the websites’ terms and conditions, including Host Guarantees, Privacy Policy Terms, and Terms of Service. For example, by clicking to book or become a host, you may be granting permission to re-use certain personal information or automatically submitting
to arbitration.

Read your Lease or Mortgage

If you don’t own the property you plan to list, check the terms of your current lease. Clauses barring sublease of the premises could cause deep trouble with your landlord or breach your lease altogether. Further, most sites make no warranty about the “rentability” of properties; the burden is on you as a host to clear that ahead of time. Even if you do own your home, it’s also worth reviewing your mortgage: some prohibit short-term rentals and use of such websites could similarly be a breach. Moreover, most insurance companies will not insure short-term rentals in advance, and misrepresentations of facts could result in cancellation of both owner’s and renter’s insurance policies.

Condo or No-Can-Do

Covenants pertaining to Condo Associations and Homeowner’s Associations also put restrictions on rentals of units, commonly for periods of less than one month. While similar to issues in a lease context, it’s more likely that other owners in your Association, will take issue with short term rentals in owner-occupied complexes. These documents often provide for fines and other punitive action for violations.

Local Laws: Taxes, Zoning and Beyond

Growing issues surround short-term vacation rental sites and local laws. Last year, New York City squashed short-term rentals of apartments, unless the tenant is also living on the property, with fines for illegal usage reaching $5,000. Likewise, in many cities, short-term rentals could be subject to hotel or tourism taxes, not necessarily factored into the rental prices seen online. Given the hotel industry’s recent push to insist the short-term rental taxes be imposed, users of these sites are likely to see taxes passed on to them through increases in rental prices. Finally, local zoning ordinances also restrict the location of short-term rentals to certain districts and within certain distances of other rentals. Occupancy restrictions could apply as well, with per-room or even per-bed restrictions. What is clear: you are not likely to find guidance from the short-term rental sites themselves. Most terms and conditions simply state that potential hosts “should” review local laws.

Since acceptance of online terms is through use of the site, there is no “negotiation”. When booking accommodations or posting listings, you cannot discard some terms as you might in a traditional lease. But a careful review can assist in compliance. Whether you are thinking of renting your pad or venturing into someone else’s home as a paying “guest”, consider consulting an attorney so when your head does hit the pillow, you can rest easy – at least about your short-term
vacation rental.

Mallory J. Sweeney is an attorney in the Real Estate Group at Fitzpatrick Lentz & Bubba, P.C. in Center Valley. She can be contacted at msweeney@flblaw.com or 610.797.9000.