iTENANT: HOW THE LAW SHOULD TREAT RENTAL RELATIONSHIPS IN THE SHARING ECONOMY.

Author:Rosendahl, Matthew
Position:NOTES
 
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TABLE OF CONTENTS INTRODUCTION 732 I. THE RISE OF AIRBNB AND THE ROOM-SHARING ECONOMY 735 A. Economic and Societal Impacts and Criticisms 737 1. Hotel Industry Criticisms 738 2. Airbnb and Housing Shortage Concerns 741 3. Short-Term Rentals and Community Harmony 743 4. Short-Term Rental Markets and Housing Speculation 745 B. The Opportunity for Meaningful Regulation 747 II. A SUMMARY OF LANDLORD-TENANT AND INNKEEPER DOCTRINES 749 A. Landlord-Tenant Treatment of Airbnb Hosts 749 B. A Summary of Innkeeper Doctrine 753 III. SHORTCOMINGS OF THE LANDLORD-TENANT APPROACH 754 A. The Mismatch of Legal Treatment and Actual Practice 754 B. Airbnb's Corporate Impunity 757 C. A Mismatch of Legal Philosophies 759 IV. REGULATING HOSTS AS INNKEEPERS 760 A. The Innkeeper Framework Better Reflects the Asymmetries of the Airbnb Host-Guest Relationship 761 B. Innkeeper Treatment Is Consistent with the Tax Treatment of Airbnb 762 C. Innkeeper-Hosts Could Evict Unruly Guests at Will 763 D. Regulating Airbnb Safety from the Hotel Perspective 765 CONCLUSION 769 INTRODUCTION

A hotel guest, intent on squatting, overstays his reservation; what does the hotel manager do? The answer is relatively simple: he uses his legal right as an innkeeper to evict the unwelcomed guest. For Airbnb (1) hosts, however, such a right to evict is dubious at best.

Cory Tschogl discovered the hard way how indifferent the law is to her position as an Airbnb host. (2) After listing her San Francisco condominium on Airbnb to help afford rent, Tschogl accepted a guest for a forty-four-day stay. (3) The guest had no reviews from other Airbnb hosts, so Tschogl accepted his reservation blindly (much like a hotelier accepting travelers as they walk in the door or make reservations online). (4) None of this is out of the ordinary for users of the room-sharing website. But, after the guest refused to pay beyond the first thirty days, Tschogl learned that who she thought was simply a guest had actually become her tenant. (5) Thus, Tschogl could not evict the guest without going through the process prescribed in California's eviction laws: an expensive, months-long legal fight to finally remove the Airbnb squatter in her condominium. (6) In the meantime, the squatter threatened to sue Tschogl for blackmail and medical costs allegedly resulting from unsafe tap water. (7) This unnecessary nightmare could have been avoided had California law differentiated between Airbnb host-guest relationships and those of the traditional landlord and tenant.

California is not alone in this view. Current doctrine in several states treats Airbnb hosts as landlords, particularly when guests stay for a length of time exceeding thirty days, (8) and even for guests staying under thirty days. (9) Additionally, many locales have yet to recognize short-term Airbnb listings as legal, compromising the ability of hosts to evict guests who should not be considered tenants even under traditional law. (10) The result for Airbnb hosts is a legal limbo: either they are treated as landlords, subject to burdensome eviction laws, or they are considered black-market hoteliers, hesitant to use local law enforcement to evict guests because regulators have outlawed short-term rentals. (11) This limbo has created a quasiunderground marketplace, with unclear legal and regulatory guidelines--an unacceptable approach to a fast-growing sector of the modern economy.

Because the sharing economy presents new challenges and opportunities that are independent of either traditional hospitality law or landlord-tenant doctrine, legislatures and state courts should adopt a uniform regulatory scheme for all Airbnb host-guest relationships that: (1) provides innkeeper tort liability for hosts; (2) relieves hosts of eviction procedures; and (3) treats hosts as micro-hoteliers, not landlords. This Note proposes a model for how the law should treat Airbnb hosts (as the preeminent example of room-sharing entrepreneurs), bringing together existing paradigms from traditional areas of the law to create a new doctrinal treatment focused on promoting the sharing economy and ensuring proper regulation of its users.

This Note will argue that instead of treating Airbnb hosts as landlords, and their guests as tenants, the law should see the platform as establishing a modern take on the innkeeper role. But even then, much of hospitality law places too great a burden on Airbnb hosts, which would threaten to stifle the growth of this new industry. In the interest of promoting the sharing economy as a new opportunity for tax and tourism revenues, governments should instead aim to steer the line between uniformly regulating the established (that is, brick-and-mortar hotels) and unestablished (that is, room-sharing services) sectors of the hospitality industry, on the one hand, and promoting noncommercialized use of room-sharing platforms, on the other. Applying a modern take on innkeeper doctrine would provide tort protections to guests that are greater than those given to tenants, while giving hosts the ability to evict unwelcome squatters. The doctrine would compel hosts providing hospitality services to show greater care for their guests, but would not require the full medley of regulation imposed on professional hoteliers. This Note will explore doctrinal options and propose ways to both regulate room-sharing platforms where the interest in safety and guest enjoyment so requires, and allow hosts the freedom to use these platforms as money-making mechanisms, promoting the overall growth of the sharing economy.

Part I will cover the development of Airbnb as the forerunner of the room-sharing economy, analyzing both its impact on the hospitality industry, rental markets, and community harmony, and the potential for meaningful regulation. Part II will juxtapose and summarize landlord-tenant law and traditional innkeeper doctrine in the context of Airbnb. Given this setup, Part III will make the case for why landlord-tenant law misses the mark when it comes to the room-sharing relationship. Part IV will propose a new treatment for Airbnb hosts that recognizes them as micro-hoteliers with a duty to protect guests from known hazards, while affording hosts the ability to evict destructive squatters at will. Ultimately, this Note proposes a framework that will help bring uniformity and congruence to an industry currently in regulatory flux.

  1. THE RISE OF AIRBNB AND THE ROOM-SHARING ECONOMY

    Although other room-sharing applications and services exist, Airbnb has undoubtedly experienced the most exponential growth. (12) Officially started in 2008, a year after three friends with air mattresses filled a need for more lodging at a design conference in San Francisco, (13) Airbnb has grown to have a larger inventory of rooms than the largest hotel chains in the world. (14) By 2014, the site had "more lodging than Hilton Worldwide or Intercontinental Hotels Group or any other hotel chain in the world." (15) As of 2017, the site reported over 3 million listings in more than 191 countries and over 160 million total guest arrivals. (16) More impressive than its sheer size is Airbnb's rate of growth, with forty-seven thousand guests in 2010 growing to sixteen million in 2015. (17) Arguably, one of the primary catalysts of this growth has been the novelty of many Airbnb accommodations, including opportunities to stay in castles, treehouses, and yurts. (18)

    From its tremendous volume of transactions, the company generates revenue by collecting a flat, 3 percent commission on the money hosts receive, and by charging an additional reservation fee (between 6 and 12 percent) to guests. (19) In 2015, the company brought in a reported $900 million in revenue (though it still operated at a loss of an estimated $150 million). (20) That is compared to 2013, when the company brought in $250 million. (21) In 2016, experts valued the company at up to $30 billion, (22) and predicted it would bring in $1.7 billion in revenue. (23) These numbers show the continued vitality of Airbnb--despite regulatory blockades--although the company still relies on investors to raise critical revenue. (24)

    As such a large, fast-growing company, Airbnb has created concerns and garnered criticisms as an unregulated threat to hotel establishments, rental markets, and community harmony. (25) But these concerns and criticisms are not necessarily well founded, nor do they capture the full picture. And the potential benefits of room-sharing to the twenty-first-century city necessitates accommodation for, and fair regulation of, Airbnb moving forward. (26) The next two subparts will consider the major criticisms of Airbnb, studying the validity of those concerns and the potential for meaningful regulations to target negative externalities while allowing room-sharing to benefit local economies in a significant way.

    1. Economic and Societal Impacts and Criticisms

      Economically, Airbnb contributes more tourist dollars per guest than comparable hotel lodgings. (27) Much of this economic benefit is attributable to two factors: (1) Airbnb helps guests save money on lodging, allowing them to stay longer, spend more on other expenses, or both; (28) and (2) whereas hotels are often clustered in a particular district, the locations of Airbnb listings are widely dispersed throughout cities, spreading the impact of Airbnb guests' spending. (29)

      In addition, Airbnb accommodations benefit localities that host large, seminal events (for example, festivals and concerts) that price many potential tourists out of a city as hotel rates skyrocket. (30) Whereas a locality without Airbnb listings might host an event that fills all of its short-term hotel spaces, localities with Airbnb options can accommodate more guests. More guests means more money for local businesses and more taxes for local governments, increasing the aggregate benefit of an event. (31) The extra income for hosts also injects revenue...

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