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Airbnb Owners: Beware of these Five Legal Pitfalls

Airbnb and Vrbo are the most popular of several “peer-to-peer” online services that allow you to share a residence you own with visitors for a fee. These platforms provide an excellent way to earn money either as a side income or as a full-time business.

Despite its many advantages in terms of independence and being potentially lucrative financially, Airbnb and Vrbo operators need to be mindful of the legal challenges.  Here we explore five of these challenges and how they can be mitigated with the assistance of an experienced attorney specializing in the specific practice areas of concern.

1. Premises Liability

When you invite guests to your property this immediately makes them “invitees”, a specific term defined under Florida law. As the property owner, you have a higher duty of care for invitees, making it very important to look after their welfare and ensure that they are not injured during their stay.  You are probably liable for any personal injury your guests sustain while they are on, at or in your property.  If these guests invite their own guests to your property, then these individuals could be considered to be at your property “under license”.  You have a lesser duty to ensure the safety of these licensees, but there is still a duty of care nonetheless.  We recommend that you hire an attorney to ensure that guests are told in writing ahead of time if and under what circumstances they can invite their own guests and in what activities they are allowed to participate while they are on your property.

2. Regulatory Compliance

Peer-to-peer hospitality is controversial and several local codes prohibit or limit their use. There are two reasons why this is the case.  Firstly, Airbnb and its kin are disrupting established hotels and the powerful traditional hospitality industry.  Secondly, although services like Airbnb and Vrbo have proven to mostly be safe for all people involved, there have been incidents were people have been threatened or attacked.  Because of these reasons, as an owner you may face regulatory hurdles and potentially fines as you establish and eventually run your business.  To protect your investment, it is highly recommended that you retain an experienced lawyer with knowledge of the peer-to-peer hospitality business.

3. Property Damage

In any industry, there is a chance that a property owner’s assets are damaged by customers during the course of business.  In the event of damage to your property, Airbnb’s current policy is to cover the owner’s damages up to $1 million.  While this is a sufficient sum for most property damage, it still requires the agreement of the insurance company to agree to pay the claim up to the full amount of the damage caused. When making a claim, it is helpful to have an experienced attorney on your side to ensure that the amount of compensation you receive is enough to make you whole.

“To protect your [Airbnb] investment, it is highly recommended that you retain an experienced lawyer with knowledge of the peer-to-peer hospitality business.”

4. Property Tax

Using a property for Airbnb or another peer-to-peer rental service can make calculating your tax liability more complex.  One way that this can manifest itself is via property tax.   In many cases in Florida, your county may overvalue your property and assess you to pay taxes based on their higher valuation.  Do you know that you always have the right to appeal the property taxes due on any residential or commercial property?  To do so, turn to a real estate law firm with the resources and experience to file property tax appeals in your county.  At South Florida Law, we file tax appeals throughout Florida.  We work on a contingency basis, meaning that the bulk of our fees are only due if we win your appeal.

5. HOA, Condo Associations and Building Management

One last hurdle faced by many potential Airbnb businesses is that they may be challenged by many Homeowner’s Associations (HOAs) and Condominium Associations.  Yet, in many cases, there is not an explicit written rule that prohibits peer-to-peer short term rentals via apps and online services like Airbnb and Vrbo.  Many HOA’s explicitly prohibit “commercial activity” or use language that prohibits subletting of the property.  However, local governments’ zoning regulations typically allow many home-based businesses to exist.  Furthermore, most HOA and Condo associations do not explicitly prevent roommates and others who share your property while making a contribution towards rent.  This creates a perceived loophole where sharing your residence with paying guests would be allowed as long as you continue to live there as well.  Working with a competent local attorney with HOA and Condo Association experience allows you to better navigate the gray area between being allowed to operate a home business while being prohibited from subletting the property outright. 

In summary, be sure to handle any disputes and challenges with experienced an legal counsel to ensure that your rights as an Airbnb or other peer-to-peer owner are protected.  Are you an owner of a property listed on Airbnb, Vrbo or other peer-to-peer platform?  Call South Florida law today at (954) 900-8885 or click here to reach out via our contact form for a free consultation.

Nima Ajabshir, Esq. is the Managing Partner at South Florida Law, with an emphasis in Real Estate Law. Mr. Ajabshir received his Bachelor’s Degree in Political Science from Florida State University, where he graduated Cum Laude.  Mr. Ajabshir, Esq. attended and received his Juris Doctorate from St. Thomas University School of Law.  In addition to being an attorney licensed to practice in the State of Florida, Mr. Ajabshir, Esq. has his real estate license, so he has experience in both the legal and transactional facets of Florida real estate.

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