Airbnb and the sharing economy: is it legal to rent out my home?

With the rise of the so-called “sharing economy,” more homeowners have been looking to rent out their properties in the short term on websites such as Airbnb to earn extra cash.  However, as short term rentals have increased in popularity, municipalities across the United States have begun considering legislation and instituting stringent regulations or outright bans, often with hefty fines for violators.

Following the law is critical to listing on Airbnb, because you (and not Airbnb) can be held solely liable for the illegal listing.  Many cities have taken to scouring the website to track down listings that are unapproved, and a new law signed by Gov. Andrew Cuomo in 2016 imposed fines of up to $7,500 on those caught illegally listing on the site.  Critics of Airbnb argue that by making it easier to rent out apartment units for short terms, less units are available on the wider market which drives costs higher.  Since 2010, it has been illegal in New York to rent out a whole apartment for less than thirty days (although the law makes an exception for when you are staying on the property for the duration of the stay).   State lawmakers saw Airbnb as a tool to evade this law, and argued that stricter fines were necessary in order to stop the illegal rentals.

If you would like to rent a house on Airbnb outside of New York City, the laws are different than those for apartments.  Your municipality could have an ordinance banning Airbnb already on the books (often rules prohibiting bed and breakfasts apply to Airbnb too), unbeknownst to you.  One local resident of Grand-View-on-Hudson, in Rockland County, rented his home on Airbnb for New Years Eve.  Not only did he return to over $100,000 in damage from the previous night’s party, the village’s mayor later told that Airbnb listings were in fact prohibited under local rules.  (Not necessarily accurate)!

Many localities might require you to obtain an occupancy licence to list, a tedious task that can cost money up front.  Additionally, many cities use zoning laws to stop Airbnb listings.  For instance, Nashville, TN passed an ordinance that categorized short-term rentals by issuing “owner-occupied” rental permits and “non-owner-occupied” rental permits, which intended to identify whether the property owner lived in his or her home full time while renting. The city then used this classification system to limit “non-owner-occupied” permits to only 3% of a census tract, effectively restricting no more than 3% of a neighborhood’s households from having Airbnb listings.  After a lawsuit from a Nashville couple who were fined under the law, a Tennessee circuit court judge threw out the law, ruling the 3% figure arbitrary and an unconstitutional restriction on property rights.  This lawsuit set a benchmark for future litigation challenging short term rental restrictions, as it established a general principle in this burgeoning field of law by showing what not to do when it comes to Airbnb regulation.  In the words of Grace Renshaw of, “either let everyone run [short term rental properties] or don’t let anyone at all.”

The Bottom Line

 It is not illegal to host on Airbnb if you own a single family home or two family home, or rent out a room in your apartment while you stay there, so long as you comply with additional local regulations.  It is your responsibility as a host to look up your locality’s regulations regarding short term rentals, and to consult with your government officials or a lawyer prior to hosting.  However, under existing state law, if you live in a permanent residential apartment building and rent out your entire apartment for less than thirty days, you are violating the law.

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