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How to Handle Tenants Who Rent to Airbnb Occupants By – Dale Alberstone, Esq.

Posted on 01. Dec, 2018 by in all, Magazine Articles

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Hello everybody.  Isn’t the Internet wonderful for the apartment industry!  Not only does it allow for free advertisements by owners to find new tenants, it also enables tenants to make money by renting out one of their bedrooms, or even their whole apartment, to transient occupants!! Well, actually the first part is nice as owners can more easily procure new tenants than in years past.  But the second part is unacceptable as it enables tenants to essentially convert their units into hotels.

As owners and management companies well know, transient occupants obtained by tenants through websites such as Airbnb.com, Craigslist.org, Onradpad.com, Homeaway.com, Aparments.com, and so forth, are definitely not desirable from the landlord’s perspective or from the point of view of other tenants.  There are many reasons for that, among which are these:  Landlords run background checks on prospective tenants to ensure that they are a good fit for the building.  Tenants run no background checks on their transient occupants.  Security of the apartment complex may be compromised by short term lodgers.  Tenants are less likely to vandalize an apartment building or steal from another tenant than are transient occupants.  Tenants are less likely to damage the interior of their own apartment unit than are transient guests.  Transient occupants are more likely to disturb the other tenants in the building, such as by playing loud music or having a noisy party at night.  Having transient occupants means more water consumption and in turn higher utility bills for the landlord.  Frequent movement of luggage in and out of an apartment will cause much wear and tear to the building structure, including its floors, walls, paint and door jambs.  The list could go on and on.

The Problem with Evicting a Tenant For Having Airbnb Occupants

Unless there is a provision in the lease which expressly or implicitly prohibits a tenant from “renting” the apartment unit or a bedroom therein to transient occupants (or the local municipality has passed an ordinance prohibiting such lodging), tenants may rent out their units with impunity. So the initial step for a landlord to deal with temporary occupants is to review the rental agreement to see if there exists any such prohibition provision in the instrument.  By way of example, AOA’s lease agreement (Form 101) contains two such provisions. The first is set forth in paragraph 1 which provides that the tenant agrees to use the premises “SOLELY AS A PRIVATE RESIDENCE…”  Obviously, allowing members of the general public to use a unit for sleeping purposes in exchange for payment of money to the tenant (which is the hallmark of Airbnb occupancy) violates the restriction that the apartment be used solely as a private residence. The second provision is included in paragraph 21 where it bars the tenant from subletting the unit or any part thereof.  The act of a tenant permitting a third person to sleep in an apartment in exchange for payment of money is subletting. If a prohibition against transient occupants is in the lease, termination of the rental agreement and subsequent eviction of the tenant is simple in theory but problematic in practice.

If the landlord approaches the occupants and asks the basis for their sleeping in the unit, lodgers are likely to say (because the tenant would have coached the occupants in advance of what to say) that they are “guests” of the tenant.  Most leases allow tenants to have guests sleep over for short durations, as does paragraph 6 of AOA’s form lease.  If the landlord asks the occupants if they paid the tenant any money, the answer is likely to be “No,” because the tenant coached the occupants about that as well.

Further, even if the occupants admit to the landlord that they paid money for the sleeping arrangement, that statement, as related by the landlord to the unlawful detainer judge, will not be admissible evidence in court because it is hearsay. Moreover, by the time the tenant is served with a 3-Day Notice to Perform Covenant or Quit, or at least as of the time an unlawful detainer action is filed, the transient occupants are probably long gone and, therefore, cannot be subpoenaed to testify. Additionally, if the landlord confronts the tenant to ask about the occupants, the tenant is likely to claim that they were his/her guests as guests are permitted to stay for short durations, as allowed by many form residential leases. That is not to say that the landlord could not win an eviction suit if he serves the tenant with a Notice to Perform or Quit, then deposes the tenant, deposes Airbnb personnel at their headquarters inSan Francisco, and subpoenas the tenant’s bank account records to prove Airbnb payments were deposited directly into the tenant’s account, etc.  But those procedures are expensive and the end result of eviction is not assured.

An Easier Way to Handle the Problem

Proving in court with admissible non-hearsay evidence that the tenant allowed his unit to be used for lodging of short term transient occupants is easier said than done, and will likely include costly attorneys’ fees. But there is a direct, less expensive, and more certain way of establishing a violation of the lease agreement than trying to prove that the tenant did in fact sublet the premises to Airbnb or other similar types of occupants. Landlords can include a provision in their lease, or attach an addendum thereto, that not only prohibits the use of the premises by transient occupants who are not otherwise permissible guests, but also prohibits tenants from even advertising the premises for temporary lodging. In other words, with such a provision, merely advertising the unit would be a violation of the lease and subject the tenant to eviction.  In that regard, here is an example of the type of provision that AOA members may consider, subject to their own lawyers’ analysis and composition:

No Airbnb Occupants, etc.:  Tenant shall not at any time advertise the premises or allow the premises or any portion therein to be advertised, whether in print, on-line, on the Internet, in social media, by word of mouth, or otherwise, for the use or occupancy thereof by any person, including without limitation, any advertisement for its use or occupancy through Airbnb, VRBO, Craigslist, OnRadPad, HomeAway, Apartments.com, newspapers, or any other source (collectively “Sources”), nor solicit anyone by any of the Sources for any use or occupancy of the premises or any portion therein, in exchange for compensation.  Nor shall Tenant allow any such person to at any time use or occupy the premises or any portion therein.  In no event shall Tenant at any time place, hang, affix, or allow to be placed, hung or affixed, a lock box or other type of potential key holder to the exterior of the premises nor to any portion of the property of which the premises are a part.  Without limiting the generality of the foregoing, Tenant shall immediately pay and disgorge to Landlord all money and other consideration that Tenant receives arising out of any act that violates this paragraph.” Then, if during the term of the tenant’s lease the landlord suspects that the tenant is using the premises for transient occupancy in violation of the rental agreement, finding the solicitations on-line or elsewhere will probably not be difficult.  Most tenants will favor Airbnb.com as their initial and thereafter principal advertising website.  Photos of the building structure and the interior of the apartment will likely be included in the ads along with the address or approximate location.  A photo of the tenant as well as the tenant’s first name may also be provided in the postings. The landlord should check the Airbnb postings covering the building’s geographic area once a day for two weeks.  If the tenant is advertising the unit for temporary lodging, the landlord should be able to find the ad.

Concluding Comments

Tenant subletting to transient occupants is a sizable and still growing problem for lessors.  Testimony in court by a landlord that various transient occupants admitted to the landlord that they had an Airbnb relationship with the tenant will likely be excluded as inadmissible hearsay. On the other hand, if Internet postings or other advertising themselves are prohibited by the lease, then proof of actual transient lodging is unnecessary. The landlord should prevail merely by presenting the advertisements to the court, augmented by the landlord’s testimony linking the ads (with photos included) to the tenant. Finally, for AOA readers who desire to include the example “No Airbnb” lease provision I have written above, please instead have your personal attorney draft his or her own legalese to include in your rental agreement.  What I have composed is intended to present the concept only.  Its verbiage may need to be revised for content and legality before including it in any particular lease.

Next month (January) I will publish in this column my annual summary of Resident Manager Laws, as updated for 2019.  Have a great December holiday season!

Dale Alberstone is a prominent real estate attorney who has specialized in real property law for the past 40+ years.  He also serves as a mediator of real estate disputes and is a former arbitrator for the American Arbitration Association.  From time to time he is engaged as an expert witness in real estate matters and for and against other attorneys who have been accused of legal malpractice. Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell.  An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity. The foregoing article was authored in November 2018.  It is intended as a general overview of California law and may not apply to the reader’s particular case.  Readers are cautioned to consult a lawyer of their own selection with respect to any particular situation. Questions of a general nature are warmly invited.  Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 269 S. Beverly Drive, Suite 1670; Beverly Hills, California 90212.  Phone:  (310) 277-7300.

 

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