Renting Out Your Home on Airbnb? City Dwellers, You’d Better Watch Out

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New York City–bound travelers who dream of booking a night through Airbnb in the gilded Trump Tower should brace themselves for disappointment: According to the New York Daily News, a resident on the 30th floor of this famous building who’d been charging vacationers $300 to $450 a night was recently forced to pay a $1,000 fine for violating New York’s new ban on short-term rentals.

Yelena Yelagina, who’s owned her Trump Tower apartment since 1998, first listed her place on Airbnb in September, according to the New York Times. Since Trump fever was building, her apartment quickly got booked up. But only a month later in October, New York Gov. Andrew Cuomo signed a law making it illegal to advertise short-term rentals online (meaning less than 30 days).

Yelagina (who refused to be interviewed by the media) pulled her listing off Airbnb in February, but in March, the law caught up with her, meting out a $1,000 fine—the first of two such penalties in New York.

But experts warn that this crackdown, and its ripple effects, are just beginning.

The new rules on short-term rentals

Sure, short-term rentals on Airbnb, HomeAway, VRBO, and other sites can be cash cows for homeowners, as well as a budget-friendly option for travelers seeking to avoid steep hotel prices. Yet experts also argue that these rentals can have negative impacts on neighborhoods. For one, having a parade of vacationers coming and going can be noisy and annoy the neighbors; it can also affect the stock of affordable housing in the area.

As a result, experts say that most major cities have enacted (or are considering) laws to regulate this arrangement; New York’s crackdown is hardly an anomaly.

“Almost all cities are trying to minimize negative impacts to neighbors, avoid commercial activity in residential areas, and maintain its stock of affordable rental housing,” says Chuck Reed, a real estate attorney and the former mayor of San Jose, CA, who passed an ordinance on short-term rentals in San Jose while he was in office.

And the fines can be substantial. From last March to mid-August, the city of Miami Beach, FL, issued fines totaling $1.59 million on 106 cases involving short-term rentals (starting at $20,000 for a first-time violation). In this area, short-term rentals are allowed only in certain districts, and completely barred in all single-family homes.

And even if you own a place that you’re renting out legally to long-term tenants, don’t assume you’re safe. In November 2016, NBC reported on San Francisco building owner Sondra Halperin who was fined approximately $22,000 because one of her tenants was renting out his condo on several short-term rental sites. As crazy as it seems, Halperin, as the building owner, had to shoulder the fine (later reduced to $1,000), because city code mandates that the property owner is responsible. Since June, San Francisco has issued about $874,000 in similar penalties.

Ultimately, the rental sites themselves could be at risk. In March 2017, Miami city commissioners passed an amendment that would “have the city look into suing short-term rental platforms like Airbnb,” Miami Commissioner Keon Hardemon told The Real Deal.

The right way to rent out your place

But don’t be fooled—short-term rentals aren’t going anywhere. If you’re still interested in renting out your place, there are ways to do it right to ensure you don’t fall into any legal trouble.

While short-term rental sites such as Airbnb often have pages outlining the legal logistics of renting out your place, experts say it’s also wise to check your own city’s ordinances and state laws. A simple Google search for “short term leases in [your city]” should point to toward a website (ideally run by your city council) that will have all the information you need, says Bob Massi, an attorney in Henderson, NV, who has experience handling real estate issues.

“Checking directly with city agencies is a good idea,” agrees Reed. He recommends starting with the planning department or the housing department either online or on the phone. Cities that have passed ordinances often have information posted on their website.

If you live in a development or condominium community, check your covenants, conditions, and restrictions, or CC&Rs, as well as the HOA bylaws and regulations for any restrictions. Be aware of any local taxes or other requirements that might apply, including zoning codes and business or rental licenses.

And law aside, it’s also important to take every precaution to not annoy your neighbors.

“Even though there may not be any prohibitions on renting, it’s important to rent your space out to the right people, because if there’s any nuisance caused, you can find yourself facing a lawsuit,” says Massi.

Do your due diligence on the people who will be staying in your home, and make sure they are aware of any noise, smoking, or parking policies.

And renters: Be a good neighbor—even if you’re temporary.

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