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San Francisco Housing Attorney Explains Airbnb Law

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Ask a Tenants Right’s Lawyer is your chance to learn how to survive as a renter in San Francisco. Attorney Daniel Wayne has a lot of the information you need to keep you in your home. This month’s topic: Why Your Broke Ass should vote Yes on Proposition F. For an expanded version of this article check out Daniel’s blog: www.wayne-law.com/blog. Got a question? Send an email to alex@brokeassstuart.com and we will forward it on.


Demystifying Prop F

At this late point in the election cycle you’ve probably heard most of the rhetoric about Proposition F from proponents and opponents alike. The opponents of Prop F have spent $8 million dollars trying to convince you to vote no. The other side has far less money (around $250k) raised mostly by housing activists and the hotel labor union.  So the ‘No on F’ campaign is pasted all over the city and internet.  A lot of the $8 million was spent on scary billboards about how your neighbor is going to sue you if you vote yes, or that you’re going to be taking an adorable elderly couple’s livelihood away from them and force them to leave SF. While I am an attorney and not a political consultant, policy advisor or politician, I can say with some measure of certainty that the majority of these claims are flat out wrong.

NoPropF

Airbnbs fear based ad campaign is disingenuous

Myth #1: Prop F encourages neighbors to spy on and sue each other


This one is outright ridiculous. The fact of the matter is neighbors already have the right to sue each other, legally, for just about anything they want: not mowing their lawns, playing loud music – you could theoretically sue your neighbor because you don’t like the way his cat looks at you. The reason it doesn’t happen all the time is because lawsuits cost money, and aren’t worth bringing unless you, the harmed party, have actual damages worth suing over. What the law does do and which is what AirBnB is scared about, is that it allows individuals to sue AirBnB and the other hosting platforms for failing to comply with the laws. And of course, AirBnB doesn’t want to be sued.

Myth #2: Prop F is going to make you tell the government where you sleep at night

Another big one is the claim that voting in favor of Prop F means that you have to report where you sleep each night to the government. This is a dramatic overstatement. As written the current law, which is intended to ensure hosts register their homes with the city, is unenforceable because neither hosts nor hosting platforms are required to release booking information to the Planning Department. This makes it impossible for the city to determine whether a host is paying the required taxes on bookings, the same way any hotel or business would, or if they’re renting out all or part of a unit. Prop F would require hosts – that is people who want to make money off renting out all or part of their unit – to file a quarterly report that includes records for bookings, and thus information about the number of nights they rent out all or part of their unit. This isn’t the Gestapo here, it’s you making an active choice to rent out your unit, and then providing the information necessary to ensure you aren’t violating the law.

lies

Blatantly untrue. Prop F asks Airbnb hosts to file their guest bookings just like a hotel would, so that they do not skip out on paying their taxes

Myth #3: Prop F is going to take away peoples ability to afford San Francisco

Prop F still allows SF residents to rent out a room or entire home for up to 75 nights annually, or nearly 20% of the year. So it wouldn’t take away hosts’ revenue streams all together. But the more important – and what should perhaps the be more obvious – fact here is that Air BnB is not, nor has it ever been, the only way to close a gap in your rent payments. You know what’s a great way use up that spare room and make your rent? Find a full-time roommate. You can give an actual San Franciscan a home and still make ends meet.
True, you can often make a lot more money renting out a spare room on AirBnB than you can renting it to someone full time. But if you don’t own your home, and are actually renting it from someone else yourself, renting all or part of your home out for your own profit is and always has been illegal and is a good way to get yourself evicted. Most leases prohibit short-term rentals, so if you’re a tenant and are listing your unit on AirBnB, your landlord may have just cause to evict you. And even if you’re getting away with it with your landlord, the existing laws on short-term rentals already prohibit tenants from renting spare space at a profit – i.e., you can’t rent out half of your $2,000-a-month apartment for 30 nights each month at $100 a night. The best you can do is charge the equivalent of a “one day” portion of your own rent for the percentage of the space you’re using to host. Thus Prop F isn’t taking away your cash machine, it never existed legally in the first place.

air bnb billboard tax

Airbnbs condescending and disastrous ad campaign bragging to San Francisco residence that they actually paid part of their taxes. Taxes that are much lower due to them not following the law

What Prop F Does

The law passed last year required hosts on Air BnB and other platforms to register their units with the city and pay taxes on their short-term rentals, the same way a hotel would. Unfortunately the agency appointed to enforce this law doesn’t have the manpower, resources, or even information such a massive undertaking requires. The problem is not that we haven’t given the agency time to figure out whether or not it can handle this monster issue; the problem is that it’s already become clear – by their own admission – that the laws are unenforceable. AirBnB doesn’t want the laws enforced.

What Prop F does at the most basic level, is create a means to enforce the laws that already exist, and serve to minimize the impact that short term rentals are having on displacement and our already limited housing stock. Prop F would: prohibit unregistered rentals from being listed on AirBnB and other hosting platforms; require hosting platforms such as AirBnB to ensure units listed on their platforms are registered with the city; imposes monetary penalties and the right for individuals to use the law to sue hosting platforms for failure to comply – giving AirBnB actual skin in the game. It also creates a more defined process for the investigation of filed complaints, and the data the city needs to enforce the law.

Why We Need Prop F

The law passed by the Board of Supervisors last year has been a complete disaster. Only 600 of the estimated 10,000 short-term rentals have registered with the Planning Department as required. That means 94% of hosts are violating the law. Because the vast majority of listings aren’t registered with the city that means those sweet sweet tax dollars that AirBnB promised the city it would be pulling in, aren’t being paid. Of those 10,000 listings, approximately 70% are non-hosted. Since the new law created no additional budget for enforcement people are filing complaints with the city but the City has no way to investigate the validity, nor the man power to investigate. In the meantime, our city is in the midst of a housing crisis. Each unit that is rented full time on AirBnB is one less unit available to would-be tenants. Since the law isn’t being enforced, landlords have every reason to clear out units so they can rent them instead to short- term rentals on a nightly basis.

Prop F may not be perfect, but it is a compromise. AirBnB pushed hard to legalize short-term rentals and they got their wish last year. Now a $24 billion dollar company wants you to agree with them that the laws they wanted shouldn’t actually be enforced.

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We Recommend Voting Yes on Prop F

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Daniel Wayne - Tenant's Rights Attorney

Daniel Wayne - Tenant's Rights Attorney

Daniel Wayne is a San Francisco based tenants rights attorney and the managing partner of Wolford Wayne LLP. His firm focuses on protecting and asserting the rights of residential tenants throughout the San Francisco Bay Area. He is an active member of the California State Bar, the San Francisco Bar Association, and the Tenants Together Network. He is a regular volunteer at the San Francisco Tenant's Union, and has appeared on 91.7 FM KALW's "Know Your Legal Rights" Program. He received the Outstanding Volunteer in Public Service award from the San Francisco Bar Association in 2012, 2013 and 2014, and has been named a Super Lawyer Rising Star each of the past three years, an honor bestowed on the top 2.5% of Attorneys in their first 10 years of practice. He is originally from Seattle, Washington and makes his home here in San Francisco. You can follow him on twitter at @sftenantlaw or visit his website: www.wolford-wayne.com for more information.

13 Comments

  1. GStorm
    November 2, 2015 at 1:07 pm

    Telling people what they are doing is illegal anyway and thus they should register with the city isn’t going to get votes for the proposition. I rent to offset the cost of my one bedroom apartment. I didn’t use to mark up the price but now if I don’t, I’d be stuck with a permanent roommate, which is not going to work for me. I can survive on the couch for only short periods of time.

    • November 2, 2015 at 3:29 pm

      Oh, a having a roommate “is not going to work” for you, special snowflake?

      It’s always inspiring to see people explain why they “have to” break the law to get the lifestyle they want. The rest of us would all love to have affordable places of our own in SF too.

      If you can’t stand to have a roommate and you can’t afford to live here without scamming (which is exactly what you’re doing, and I hope your landlord finds out about it) it sounds like maybe SF isn’t the place for you.

      • Kevin Smith
        November 3, 2015 at 8:32 am

        If you can’t afford it, maybe San Francisco is not the place for YOU !

      • November 3, 2015 at 3:19 pm

        Did you even read my comment before responding with your nonsense, or were you just too stupid to comprehend it?
        I assure you, I can afford it – and without illegally whoring out my living room to tourists at a markup to subsidize my rent.

        But hey, keep beating your entitled slumlord drum and jacking up the rent on the substandard dump your parents left you, precious.

        BTW, your movies suck – a 4th grader could write better dialogue.

  2. EndlessIke
    November 2, 2015 at 2:25 pm

    I am utterly unpersuaded to give any moral or legal deference to the housing policy of any city insane enough to continue broad rent control policies in 2015.

    My default assumption is that any additional law passed or attempted to be enforced by such a dangerously ignorant / spinelessly political entity should be resisted and subverted to the greatest extent possible.

    It’s a bad law if Prop F fails. Its a bad law if Prop F passes. Contrary to Comrade Wayne, I would encourage everyone to continue to disregard this law no matter the outcome of the vote.

    • November 2, 2015 at 3:34 pm

      You’re right about one thing – San Francisco is consistently easy on people who ignore the rules and game the system, and consistently hard on people who try to do the right thing.
      Oh, are you upset that you can’t cash in on the housing crisis as a landlord?
      I’d suggest you buy up some slum rental properties in Vallejo and Stockton where you can charge people whatever you want.

      • EndlessIke
        November 2, 2015 at 3:42 pm

        There is no economic basis for rent control. None. Not 1 economist out of 10 supports it, regardless of political leanings. Its surefire way to force market rents ever higher. There’s a scientific consensus on this one too.

      • Daniel Wayne - Tenant's Rights Attorney
        November 3, 2015 at 9:07 am

        Hmm, do you have a citation to back up that assertion?

  3. Kevin Smith
    November 3, 2015 at 8:29 am

    If you tenant activists want ‘housing stock” buy your own stock, instead of trying to confiscate by force from the rightful owners. Give me a break about “enforcing laws”, you only want landlords to follow the law and you break laws you don’t like constantly! Everyone in SF has little respect for laws, unless they benefit them personally. Most master tenants charge way more than the law allows for sub tenants.

    • Daniel Wayne - Tenant's Rights Attorney
      November 3, 2015 at 9:12 am

      Kevin, tenant activists aren’t trying to “confiscate” housing stock, and certainly not by force. This law is about curbing the use of private homes by homeowners and tenants as their own hotels for profit.

      Subtenants that believe their master tenant is overcharging them rent can file a petition with the SF Rent Board where an Administrative Judge can then order a master tenant to reimburse a subtenant for overcharging rent.

  4. Alexandra Liss
    November 3, 2015 at 11:45 am

    First, thank you for your insights! Love your articles, as always 🙂 …. I am not a big fan of adding regulations as much as the next — but there needs to be something done to protect the rent control housing stock. It is not Airbnb alone than tis the problem. Its the abuse of the people using it.. It is way too tempting not to be greedy when its just “us” using a loophole, trying to get by in this expensive city. But the whole city has now been affected… And that is why regulation exists. Because as individuals its too easy to defect and justify why its ok for US to rent out your extra bedroom in order to pay your rent or make a profit… But bottom line, rent control was not made for US to take housing stock off the market, at the detriment to everyone who lives here–ultimately including ourselves.. Thats why it is important to ensure that airbnb respects the rent control law, and unless airbnb receives landlord permission aka registers with the city, we should not allow the listing to go live on airbnb. All this other “yes on Prop F” irrelevant regulation limiting amount of days someone can rent short term is a joke! No really, it was written by someone who doesn’t know how airbnb works and how easy it is to work the system to find someone via airbnb and then make a deal with them off site. That screws airbnb, but actually does nothing to regulate the problem: which are the opportunity cost defectors (like I once was and did not know it) … So the 839,336 San Franciscans who are locals are living in 372,560 rental units in the city. Out of those, 172,000 are rent controlled… Per usual, both sides are misusing data for their aim– when we need to focus on the root of the problem: which is protecing our rent controlled units and greater housing stock, as one of the many variables necessary to get our supply back up… Even if it means, 172,000 of us, dont get to be illegal Landlords anymore. Prop F may have missed the mark, but the point is relevant: airbnb enables and makes it too easy to partake in an illegal act that does influence and greatly affect our housing stock. Airbnb isnt evil. In fact, it serves an awesome purpose– but it must be regulated because its users do not follow the law. End of story. Airbnb planted the seed of opportunity cost, made it too easy, too unregulated– an is inarguably a contributor and influencer that has worsened our housing crisis. The lack of housing stock has turned us all into golden handcuff hypocrites, where we are one lease away from not being able to live in san francisco anymore ourselves! I hate to say it, but Prop F, limiting landlords to renting for x amount of days, isnt even that relevant because its so easy to find someone on airbnb, book them for a day or week online, and then unofficially continue an exorbitantly priced agreement offline. The problem is that the median income in SF is $75,000 and the housing stock supply is so low, you need to make that much to thrive here now– or you need to turn your apartment into a little business to make ends meet or have 4 roommates in a broken down Victorian… Its game theory– and airbnb in this delicate rental market has enabled and made it to easy to be “defectors” doing what ever is best for ourselves short term without realizing that the numbers are adding up… I will be totally honest with you: I was an early adopter airbnb host while I was editing my film. It was incredible because I was able to rent out my room or little dungeon loft I built and make ends meet when I was in my broke artist phase ( editing my film). I made $$$… Problem was, it was never legal. It became apparent really fast how much more money I could make renting my spare bedroom for a little more, then a little more, because it was the fastest and easiest way I could make money… I could have gotten by with a regular roommate, but short term was more profitable & this city was getting more and expensive. Little did I know, I was contributung to the problem… And so I passed my rent control flat onto two best friends for cost & I got out of the game. It was hard to let go of that income, but it was the right thing to do… and illegal! I just found out the same flat next door — which is NOT a nice place — is going for near double of what they pay. That is no coincidence. It is supply and

  5. harshestreality
    November 3, 2015 at 10:30 pm

    This article is mostly just hotel industry special interest drivel, but your answer for Myth #1 is particularly egregious. You completely leave out the fact that the city, even if they find the defendant hasn’t broken the law (which is absurdly easy to do as the language of F is vague at best), still has to assist the plaintiff in suing the defendant. Keep in mind, this is after the city has found that the defendant IS INNOCENT and hasn’t broken any law. So the city has to help the plaintiff sure so that they can possibly collect “special damages” that they keep for themselves. Talk about a HUGE waste of city money, time, and an overload on the court system.

    If you seriously think AirBnB is the reason that our city is in a housing crisis, and that this horrible draconian measure would do ANYTHING to fix that…you should remove yourself from the conversation and more importantly the voting pool. You clearly haven’t read Prop F. You likely don’t understand there are laws already in place that resolve much of this issue in a non-draconian way. You likely think rent control is a good idea (which is insane). You clearly don’t understand the decades worth of historical actions by SF residents and the government. You clearly don’t understand capitalism and the free market. You certainly don’t understand supply and demand. You also likely don’t understand migratory/relocation patterns of people over the last decade+. So yeah, you almost certainly understand little about the subject and blindly believe that “this will fix AirBnB and save SF housing”. SMH.

  6. […] just two recent highlights involving housing: Last November AirBnB spent more than $8 million to protect its control over a huge chunk of San Francisco’s housing stock, which made national news when the […]