No Assignment, Sublease…or Airbnb?

Airbnb is a new internet hosting platform being used by people worldwide to list their residential property, or a room, to short term guests or occupants in exchange for payment. What many landlords don’t know is that Airbnb does NOT restrict the use of the site to title owners of the property. This could potentially create problems for both landlords and tenants when the tenants list the leased property for rent on Airbnb without the landlord’s knowledge or permission. I would hope that any landlords or property managers reading this article have a signed written lease agreement with their tenants, but if you do not, I would strongly urge you to do so for the reasons stated below (among other legal issues not addressed in this article).

Although many standard form leases contain a “no assignment” and/or “no sublease” clause, these clauses may not contain language sufficient to clearly restrict Airbnb rentals, or use of other hosting platforms by tenants. An assignment requires that the entire remaining lease term be assumed by the assignee, while subleases only transfer a portion of the remaining lease term, with a right of re-entry. It can be argued that Airbnb rentals could constitute a sublease because the tenant/sublessor is only transferring a portion of his or her remaining lease term to the Airbnb guest/sublessee, however the majority of tenants probably do not know what a sublease is, or that Airbnb rentals could qualify as such. It is important to note that unless the Airbnb guest expressly assumes the tenant’s obligations under the master lease agreement, the landlord has no right to enforce the lease terms against the Airbnb guest for violations of the lease agreement. The booking confirmation received by a guest and host on Airbnb certainly does not contain any language assuming lease obligations, thus a landlord’s inability to enforce the lease terms against an Airbnb guest could cause major issues for the landlord in eviction proceedings. In certain cases, the Airbnb guest may have a legitimate defense to an unlawful detainer action through a claim of right to possession, regardless of whether or not their occupancy was prohibited by the master lease. This is why it is essential for landlords to ensure that tenants clearly understand that listing the property on hosting platforms is strictly prohibited.

Tenant breaches of lease agreements due to Airbnb rentals is apparently such a common issue in California that on September 1, 2015, the California State Senate enacted Senate Bill No. 761 which added Sections 22590, 22592, and 22594 to the Business and Professions Code (“B&P”). B&P Section 22950 created the term “hosting platform” to encompass internet rental listings, like Airbnb, which are used for the primary purpose of renting a residential unit, for profit, to tourists or transients. The law now requires that all hosting platforms provide a warning notice to tenants who are listing a property or room on the site, that they should review their lease agreement, or contact their landlord, prior to listing the property on the hosting platform, to ensure their actions do not violate the lease agreement. Unsuspecting tenants who do not review their lease agreement, or fail to obtain the landlord’s prior approval of the use of the hosting platform, face the threat of legal eviction proceedings being brought against them for breach of the lease terms and conditions.

From a legal perspective, it is advisable that landlords and property managers review their current lease agreements and house rules with an attorney, paying special attention to assignment and subleasing clauses. Modifications to these clauses may be necessary to make it explicitly clear to tenants that they are not permitted to list the leased property on any hosting platform, and that any violation is a breach of the lease terms.

This article is for informational purposes only and does not constitute legal advice. The information in this article is specific to California laws only, and should not be relied upon in other states. For specific questions related to this article, please contact the Law Office of Ashley M. Peterson, and we would be happy to answer whatever legal questions you may have.

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