Back in September, Nigel Warren rented out his bedroom in the New York apartment where he lives for $100 a night on Airbnb, the fast-growing website for short-term home and apartment stays. His roommate was cool with it, and his guests behaved themselves during their stay in the East Village building where he is a renter.
But when he returned from a three-night trip to Colorado, he heard from his landlord. Special enforcement officers from the city showed up while he was gone, and the landlord received five violations for running afoul of rules related to illegal transient hotels. Added together, the potential fines looked as if they could reach more than $40,000.
Warren, like many if not most Airbnb users, hadn’t read the terms and conditions on Airbnb’s website telling him not to break any laws (while also wiping the company’s hands clean of responsibility for hosts’ compliance with those laws).
So he gulped hard, begged his landlord not to evict him, and told him that he’d attend the mandatory administrative hearing related to the violations and pay any fines. Then, he gulped harder and hired a lawyer for $415 an hour.
He also fired off a note to Airbnb, which collects the nightly fee on behalf of its hosts and keeps a bit for itself. Given that the company knows good and well that many of the hosts on its site who live in big cities are violating the rules, he said, why not warn people more explicitly about the kind of trouble they could find themselves in? ‘‘By ignoring local laws, you are making casualties of the very people you need to make your site a success.’’
From the perspective of an Airbnb customer who needs someplace to stay — and I count myself among the growing numbers of satisfied Airbnb customers — the service pushes every possible consumer pleasure button. You beat the system by avoiding high hotel rates, get to stay in neighborhoods where there aren’t hotels at all, and can connect with plugged-in local hosts, too.
But all airy talk in tech start-up circles of ‘‘collaborative consumption’’ and ‘‘the sharing economy’’ aside, five-figure fines and the possibility of eviction are no joke for those hosts. In fact, local laws may prohibit most or all short-term rentals under many circumstances, though enforcement can be sporadic. Your landlord may not allow such rentals in your lease, or your condominium board may not look kindly on them.
Warren, 30, acknowledges that he broke the city rules and did not read his lease to see if this sort of subletting was kosher. But ignorance of the law is no excuse.
But one enduring mystery for him was why the city came after him in the first place. He was not renting out his bedroom all that often, after all.
Still, he was breaking the law. And that law says you cannot rent out single-family homes or apartments, or rooms in them, for less than 30 days unless you are living in the home at the same time. Popular Airbnb markets like San Francisco and New Orleans have even more restrictive rules, and London and Paris have their own ordinances. People who want to go through the official licensing process for inns or bed-and-breakfasts have that option if they so choose.
That said, New York City officials don’t come looking for you unless your neighbor, doorman, or janitor has complained to the authorities about the strangers traipsing around. ‘‘It’s not the bargain that somebody who bought or rented an apartment struck, that their neighbors could change by the day,’’ said John Feinblatt, the chief adviser to Mayor Michael R. Bloomberg for policy and strategic planning and the criminal justice coordinator. The city is also concerned with fire safety and maintaining at least some availability of rental inventory for people who actually live there.
Since the mayor’s office of special enforcement began looking at the short-term rental issue in earnest in 2006, it has received more than 3,000 complaints, conducted nearly 2,000 inspections, and issued nearly 6,000 notices of violation.
On Thursday, Warren became one of the lucky violators. He arrived at a hearing ready to take his lumps and write a large check. Instead, he discovered that the buildings department never filed the proper paperwork with the Environmental Control Board, which runs the hearings. A clerk dismissed all violations against him with no fines.
His complaint with Airbnb remains, though. ‘‘They need to start being a little more responsible and acknowledging what happened and providing a warning to users,’’ he said. ‘‘They’re in some kind of fight with the cities, and the users are paying the price.’’
Warren happens to make his living by making websites easier to use, and he and I kicked around the idea of a box that would appear when you register as a host on the Airbnb site in certain cities where the laws are clear. Perhaps it isn’t reasonable to expect the company, which believes it’s worth at least $2 billion according to a TechCrunch report on its latest fund-raising efforts, to track down every zoning law in tiny vacation hamlets. But it can certainly make the rules clear in urban areas where it knows that people could easily end up in hot water.
‘‘I believe that any company that claims that sort of worth should have the social responsibility to disclose what the laws are in the jurisdiction that they’re in,’’ said Janan New, executive director of the San Francisco Apartment Association, a membership group for landlords that has repeatedly tangled with Airbnb. ‘‘And if they’re not capable of that, then their worth isn’t that high.’’
I asked Airbnb two questions. Why not put the warning in place that I described above? And given how many listings on the site come from hosts who are breaking the law or the terms of their lease or their condominium board rules, does it want every one of those people to take down those listings today?
Airbnb’s spokeswoman, Kim Rubey, did not answer either question on the phone and e-mailed a statement several hours later that didn’t really answer them either. The company is ‘‘constantly re-evaluating how to do its job better,’’ the statement said.
Or is it? Many citizens of start-up nation believe that living on the Web grants them membership in an exalted class to which old laws cannot possibly apply.
This sort of arrogance takes your breath away, until you realize just how brilliant a corporate strategy it is. If you stopped to reckon with every 80-year-old zoning law or tried to change the ones that you knew your customers would violate, you’d never even open for business.
But if you can create facts on the ground — and 200,000 listings worldwide — then you have a constituency that is willing to lobby on your behalf. Better then, to march forward with earplugs in, blindfolds on, and fingers crossed. If you hear no evil and see no evil, then you’ve got a fighting chance at a billion-dollar valuation as long as the regulators don’t have enough firepower to slow you down.
This is all well and good for venture capitalists, start-up executives, and Airbnb guests who aren’t worried about underinsured hosts. But if you’re a host, you need to consider a couple of things. Could you afford the kinds of fines Warren was facing? If not, take your listing down.