Notes on Chiu Airbnb

Does the Chiu Airbnb legislation override the provisions against this kind of subletting in the SFAA lease?

The short answer is “no,” it does not, as more fully explained below. On October 7, 2014, the Board of Supervisors passed legislation sponsored by Board President David Chiu that allows tenants and owners to rent their primary residence for periods of less than 30 days. The law becomes effective on February 1, 2015. This law essentially changes the zoning for the entire City and allows hotel-like usage in our apartment buildings. Airbnb and other travel websites pushed this legislation through the Board so as to legalize what many tenants and owners were already doing: renting rooms or apartments on a short-term basis to travelers which, prior to the law’s passage, violated the Planning Code’s prohibition of rentals less than 30 days unless the property was licensed as a hotel or motel. Now, most all of the residential housing stock may participate in short term rentals provided certain requirements are satisfied.

Due in large part to the monumental efforts of SFAA staff, our industry was able to insert key prerequisites for short-term rentals into the law. For example, owners or tenants who wish to “host” short-term guests must maintain liability insurance for at least $500,000. The host must prove that the unit is a primary residence as documented by vehicle registration, driver’s license, voter registration, utility bills, and a homeowner’s tax exemption if the host is an owner. For rent-controlled tenants who are hosts, they may not charge their guests more rent that what they are obligated to pay their landlord.

In addition, and pertinent to this question, the legislation specifically states as follows: “[The new law] does not confer a right to lease, sublease, or otherwise offer a residential unit for Short-Term Residential Use where such use is not otherwise allowed by law, a homeowners association agreement or requirements, any applicable covenant, condition, and restriction, a rental agreement, or any other restriction, requirement, or enforceable agreement.” This SFAA-drafted provision essentially permits a landlord to deny a tenant permission to use the unit for short-term rental if the lease provision restricts or prohibits subletting. Likewise, condominium associations may also prohibit through their CC&Rs condos in the building from being used in this fashion.

Yet some rental agreements have no such restriction. Other owners have inherited tenancies lacking a written rental contract. In those instances, if the tenant complies with the legislation, short-term vacation rentals could occur over the owner’s objection. Conversely, if there is an express lease covenant prohibiting this type of usage, as is found in the 2015 SFAA Lease Agreement, then the landlord retains the ability to say no.

Therefore, make sure you always use the best lease contract such as the SFAA Lease Agreement for new tenancies. Continue to monitor your buildings to ascertain whether tenants are subletting rooms on a short-term basis without your knowledge or consent. Tenants are expressly required to first apply to the Planning Department, which will then in turn contact the owner, if they want to engage in short-term rentals. In sum, while this legislation is not ideal for either our industry or the overall quality of neighborhood life in the City, SFAA and its industry partners worked hard to insert key provisions requiring a tenant to abide by the lease and to provide notification before subletting occurs.

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