Landlords, you have a duty to maintain your properties in the best shape possible and stay in good standing with neighboring homeowners. This is especially true for properties bound by the rules of a homeowners association.
In recent years, Airbnb has become the preferred way for people to make some easy, extra cash. The idea seems innocent enough; what harm could come? However, if you allow tenants to list your property in full or by room on Airbnb, you’re asking for trouble.
There are some benefits to letting your tenants sublet your property on Airbnb. For example, you could form a partnership and split the profits. However, finding a tenant you can work with on that level might be a challenge. In the end, the income won’t be worth the work.
If you own rental property, here are 5 reasons to explicitly forbid Airbnb listings in your lease agreements:
1. Airbnb listings might be illegal
Depending on zoning laws, some Airbnb listings might be illegal. For example, Airbnb rentals in San Francisco are only legal if the host is a full-time resident. All hosts must register with the city and rentals cannot exceed 90 days. Some cities require permits and payment of hospitality taxes. For example, the city of Santa Monica, CA requires hosts to have a business license, live on the property during the renter’s stay, and pay a 14% occupancy tax to the city.
There’s no guarantee your tenants will play by the rules. While you can hold your tenants legally responsible for lease violations, you might have to foot the bill for unpaid fees and taxes owed to the city. Being the property owner could make you liable to the city for problems caused by Airbnb guests.
2. You can’t trust your tenants’ judgment
You might be able to trust your tenant, but do you really want to extend that trust to random strangers they find on Airbnb? When your tenants rent the house or a spare room to Airbnb guests, it’s no different than you renting your property to a different stranger each night. If you don’t allow subletting, you shouldn’t allow Airbnb guests.
Airbnb doesn’t conduct background checks, nor do they check references before allowing someone to book a room. You screen applicants for a reason and choose your tenants based on specific criteria. Since you can’t screen Airbnb guests, allowing them to stay in your rental property defeats the purpose of tenant screening.
Explicitly prohibiting Airbnb rentals in your lease agreements is the only way to ensure all tenants meet your standards.
3. Explicit instructions can prevent bad situations
While some tenants might understand that Airbnb is a form of subletting, many won’t see it that way. If you don’t explicitly prohibit Airbnb rentals, some tenants will interpret that as an invitation to do whatever they want. An explicit rule will deter some tenants from crossing the line.
4. Homeowners insurance doesn’t usually cover commercial damage
Most Airbnb guests won’t be destructive, but there are exceptions to that rule. You don’t want to experience one of those exceptions.
If a tenant rents your property on Airbnb and the Airbnb guest throws a wild, destructive party, don’t count on your homeowners insurance covering the repairs. Airbnb has a policy they call the $1,000,000 Host Guarantee, which is designed to cover most damages excluding personal injury, cash, collectibles, rare artwork, jewelry, and pets. However, some Airbnb hosts say they’ve had a hard time getting Airbnb to pay for damages that fall under this guarantee.
It’s not worth the risk to allow your renters to list your property on Airbnb. If your property is damaged by an Airbnb guest, your tenant might try to avoid responsibility. However, if your rental agreement explicitly prohibits Airbnb rentals, it will be crystal clear that your tenant knowingly violated the lease and they’ll be held accountable in court.
5. Your renters shouldn’t profit off your property
While damages and legal fiascos are good reasons to prohibit Airbnb rentals, the biggest reason is that your renters shouldn’t be profiting off of your property. Depending on where your property is, your tenants could end up generating more income than you’re getting from rent.
Just say no to Airbnb sublets
Airbnb properties are challenging to maintain and some tenants might not follow the law to the letter. You don’t want to put any of your properties at risk by allowing tenants to sublet to strangers.
Keep your property management duties as simple as possible. Prohibit Airbnb sublets in all of your leases and preserve your investments and cash flow.