Turning Entrepreneurs into Outlaws.

• Author: Sandefur, Christina

When first asked to participate on a panel about "economic crimes," I thought I was not really equipped to opine on criminal law since I spend my time in court litigating civil cases to protect constitutional rights. Then I thought a little more about the types of cases I had been working on. I realized, quite to my dismay, that I am qualified to discuss criminal law because I have observed our governments at all levels engaging in a disturbing trend of criminalizing innocuous, peaceful economic activities, simply because those activities involve the exchange of money.

I will discuss a local and a federal example of these attacks on economic liberty. At the local level, cities across the nation are turning responsible homeowners into criminals, simply for renting out their homes to overnight guests. (1) Home sharing, often facilitated via platforms like Airbnb (2) or HomeAway, (3) involves hosts opening their homes to overnight guests in exchange for money. You might think of it as a short-term rental or vacation rental. Despite technology making this practice more apparent and prevalent today, it has actually existed since the country's Founding.

People have allowed overnight guests to stay in their homes for centuries--sometimes in exchange for money, but also in exchange for chores, meals, or other work or goods. (4) This gives homeowners additional money, which they can use to pay their bills or make improvements to their homes. (5) It also gives travelers a wider variety of options in terms of price, location, and style of housing, and it allows them to experience local communities more intimately. The only thing that has changed between the Founding period and today is the burst of technology that has allowed homeowners and visitors to use online platforms to communicate. This development has made the practice of home sharing easier than ever before. This practice is also more accountable than ever before because all parties have access to more information. For instance, it is easier than ever for renters or neighbors who have a bad experience to leave feedback. (6) Further, homeowners can be more selective about who stays in their homes, and they are able to make sure that those people are knowledgeable about local laws.

Cities, however, are responding to the growth in home sharing in a very different way. Rather than welcoming this economic activity, officials are instead imposing draconian new rules on this long-established practice. (7) It has always been legal to allow an overnight guest to stay in your home for free, to let a friend to sleep on your couch, to have house sitters, or to have someone stay in your home and take care of your pets while you are out of town. However, in a growing number of cities, it is now not just illegal, but in many jurisdictions it is an actual crime, to rent your home short term in exchange for money. (8)

These cities treat home sharing itself as the crime--regardless of whether a particular guest is causing any kind of nuisance like making excessive noise, littering the yard with trash, or parking where they should not. (9) These are very difficult laws for cities to enforce. (10) Of course, the reason for that difficulty is the exact reason why the practice should not be a crime--although there are occasional problems with short-term rentals (as is true of long-term rentals, or owner-occupied homes), most of the time there are not. Usually, neighbors cannot tell whether somebody is renting their home to a short-term renter because the guest uses that home for a residential use--in the same manner a homeowner or long-term renter would--and goes about his business in a residential way. Unless the guest causes a disturbance, neighbors usually do not have reason to know whether somebody is staying in that home in a short-term manner (and thus violating the law) or a long-term manner (and is not). Therefore, cities have a difficult time enforcing these laws outside of the very small number of instances where occupants are actually causing nuisances (and thus are already violating other laws), so they have to resort to drastic measures. (11) And cities get away with such extreme actions because anti-home-sharing laws are laws prohibiting economic activity. Law schools teach students that, in the eyes of courts, economic rights are not really rights at all. (12) Courts are willing to rubber stamp infringements on economic rights, treating them more like mere privileges and permissions from the government. (13)

This problem is compounded when cities impose massive fines on anyone who violates these anti-home-sharing laws. The City of Miami Beach, which was founded on tourism (14) and depends on tourism as its lifeblood, has decided to outlaw and criminalize the renting of one's home to short-term overnight guests in almost every place in the city. (15) If you violate that law and have somebody stay in your home overnight, you can be fined up to $100,000 per night. (16) This is not an overnight guest who is causing any sort of problem--the violation is simply that you've let somebody stay in your home overnight. A fee for home sharing just a few nights could quickly add up to the entire value of a host's home.

Cities look at this as a way to increase revenue, (17) and it is a win-win for them because they get to outlaw the activity and also intimidate residents into giving up their property rights because of the serious consequences. And then, of course, city governments get to pocket the money (if they're actually able to recover it--many people owe the City of Miami Beach large sums of money and are unable to pay it). (18) These people will eventually lose their homes and their livelihoods because the city is going to go after them for those unpaid fines. (19)

This is not only abhorrent public policy--it is also unconstitutional. My colleagues at the Goldwater Institute are challenging these excessive fines in Florida state court under the Excessive Fines Clause of the Constitution of the State of Florida. (20) Many state constitutions protect individual liberties to a greater extent than the U.S. Constitution, and the state constitutions have their own provisions protecting individual liberty and stopping government overreach. (21) Florida's Excessive Fines Clause protects people from fines that are "grossly disproportional" to the person's action. (22) If it is not grossly disproportional to be charged $100,000 for peacefully exercising your property rights and letting somebody stay in your home overnight, then I do not know what is. That is the argument the Goldwater Institute will be making in Florida state court. (23)

One might ask why advocates for economic rights have been turning to the courts instead of the city councils and the state legislatures. There is a legal reason and a practical reason. As a legal matter, it is the responsibility of the courts to uphold their state constitutions and the U.S. Constitution, and citizens should never have to go to a city council or a state legislature and beg them to respect their constitutional rights. (24) That is the job of judges upholding the constitutions, that is why we have constitutions, and that is why we go to court. (25) And as a practical matter, citizens have a tough fight against special interests before city councils and state legislatures. The hotel industry, for example, had an incentive to go to the Mayor and City Commission of the City of Miami Beach and convince them to outlaw and criminalize home sharing. (26)

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