Los Angeles Court Ruling OKs Landlord's Boot Of Rent-Controlled Tenant Who Peddled His Attic On 'Short Stay' Sublet Basis On Airbnb

From a client alert from the law firm Thompson Coburn LLP:

• [T]he problems faced by Airbnb providers was recently illustrated in the case of Chen v. Kraft, decided [last] month by the Appellate Division of the Los Angeles County Superior Court.
  
  The defendant, Mr. Kraft, occupied a rent-controlled unit in the Venice area of Los Angeles, a very popular area near the Pacific Ocean thought by many as hip and Bohemian. Kraft decided to make some extra money on Airbnb by listing the attic of his rental unit, which he called a "loft."
  
  After Kraft got away with it for a while, his landlord, Ms. Chen, commenced an eviction proceeding. She alleged that renting out the unit was illegal because the premises was located in an R-1 zone (one-family dwelling) which did not permit hotels or apartments — a ground for eviction under the Los Angeles Municipal Code.
  
  Ms. Chen also submitted a City of Los Angeles Tax Registration Certificate demonstrating her payment of Los Angeles's "Transient Occupancy Tax" whereas Mr. Kraft, no surprise, could not demonstrate his own tax compliance. The trial court granted summary judgment in favor of Ms. Chen, and the Appellate Division agreed. Per the Appellate Division, the Airbnb agreement at issue constituted "an illegal contract in violation of existing regulations, and was therefore void and unenforceable."
  
  Thus, in Los Angeles, a court has decided you can't put your unit on Airbnb, and if you do, the arrangement will be adjudicated illegal. Other cities, including New York and San Francisco, have also enacted legislation addressing temporary rentals such as Airbnb, with attendant slings and arrows of outrageous fortune.
  
  The takeaway is this: If you're deciding to BNB or not BNB, you should perform some due diligence to make sure that your host municipality fosters a supportive environment. And just as importantly, you must satisfy yourself that your listing complies with applicable codes and regulations.

Source: Landlords And Tenants: To Airbnb Or Not Airbnb, That Is The Question.

For the court ruling, see Chen v. Kraft, No. BV 031047 (Super. Ct. App. Div. Los Angeles County, January 13, 2016).