As a result of the proliferation of on-line hosting platforms (Airbnb, VRBO, Craigslist, etc.) the number of incidents of short-term residential rentals in San Francisco may have reached 100,000 last year. What’s interesting is that the majority of these incidents were illegal under San Francisco law. Indeed, San Francisco currently bans owners and tenants of residential units (including condominiums) from entering into occupancy agreements of less than 30 days. (San Francisco Administrative Code Chapter 41A.4-5. )

For San Francisco renters enjoying below market rent under San Francisco’s rent control ordinance, using Airbnb to make a few extra bucks can be a risky endeavor. Short term rental of a residential unit constitutes an “illegal purpose” triggering a landlord’s right to immediately evict the violating tenant. (San Francisco Administrative Code Chapter 37.9(a)(4)).

This may all change.

The proposed legislation seeks to amend the blanket ban on short terms rentals with the goal of promoting “reasonable flexibility in renting residential spaces on an occasional basis”. Under the proposed legislation, occupancy agreements of less than thirty days will be permitted provided the owner/tenant meets certain conditions, including:

  • occupying the property for at least 275 days in the preceding calendar year;
  • maintaining home owner’s or renter’s insurance (or using a hosting platform which covers
  • property damage);
  • paying Transient Occupancy Taxes;
  • registering with a registry to be created by the city; and
  • for rent control tenants, not charging rent in excess of that charged by their landlord.

The proposed legislation, however, will not confer a right upon a tenant to enter in to a short term occupancy agreement if such action is prohibited by that tenant’s lease agreement. That said, a landlord does not have a right to immediately evict a rent control tenant for violation of a sublease clause like the landlord does when a tenant uses the unit for an “illegal purpose”. Rather, a tenant has the right to cure any such violation of a sublease clause after having received written notice from a landlord. (San Francisco Administrative Code Chapter 37.9(a)(2)). Thus, the proposed language would give rent control tenants who are willing to push the limits of their sublease restrictions the right to use Airbnb – at least until they receive written notice to cease.

In response to the proposed legislation, housing activists in early  May, 2014  filed a ballot initiative with the Department of Elections which seeks to further limit short term rentals by, among other things, requiring authorization from the property owner, registration on a registry available to the public and compliance with current short term rental laws.

As Airbnb is a San Francisco-based company and the availability of housing in the City is becoming an increasingly contentious issue, this is sure to get interesting . . . .