THE BLOG
12/17/2013 04:34 pm ET Updated Feb 16, 2014

The Silver-Lined Truth About Airbnb and You, New York

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I am one of the many New York City residents who has hosted people in my apartment through Airbnb. Ever since we Airbnb hosts started winding up in court earlier this year, the "illegality" of "Airbnbing" your place in New York has made headline after headline. Representative samples are Gothamist's "3 Night Airbnb Rental Ends Up Costing East Village Man $2,400" and the New York Times' "A Warning for Hosts of Airbnb Travelers" (as in Martha Stewart, not hosts of angels). In October, New York Attorney General Eric Schneiderman subpoenaed Airbnb for information on everyone who rents out space through the service. It appears war is brewing between Airbnb and the government, and not only in New York.

Dozens of articles have highlighted the lack of clarity in the section of the New York housing code that appears to allow some short-term sublets and disallow others, depending on the kind of rental and the circumstances of it. Are you just offering a room in your place or the full apartment? Is your roommate there, and if so, does she let the guests eat her eggs? Nigel Warren, the guy who "was fined $2,400" by the City, ended up winning on appeal based on one of these distinctions (his roommate was there). Meanwhile, policymakers, Airbnb advocates, their hotel industry counterparts and others like yours truly continue to weigh in both on how to interpret the current law and how it should be revised.

But in the mess of substantive issues of interpretation and normative issues of optimal policy, there is something much more basic that everyone has gotten wrong. Airbnb hosts who rent from a landlord, you're not breaking a law. Your landlord is.

The scope of a law must be defined. That scope may be defined within it ("people under the age of 21") or in where it appears -- a statute passed by the Florida legislature doesn't apply to me as a New York resident living in New York unless that's made clear in the language of it ("out of state residents," for example). The violation Mr. Warren was fighting was Section 28-118.3.2 of the Administrative Code of the City of New York. The violation description in the official government penalty schedule is, "Occupancy contrary to that allowed by the Certificate of Occupancy or Building Department records." To read the opinion of the board on appeal demonstrates clearly what I'm getting at, which is that any "violation" that took place would have been a building violation committed by the person responsible for obtaining the property certificate of occupancy and maintaining a premises within the terms of that certificate, i.e. the building's owner.

Nigel Warren, the fellow who "was fined by the city," was indeed not fined by the city -- that's why the case against "him" was actually City of New York v. Abe Carrey (his landlord). The journalists who suggested or outright wrote that Nigel was the government's target were incorrect and probably just taking their information for each other in a game of telephone that inevitably distorts truth (the first time that's happened).

The earliest articles about the case noted this important distinction, that the reason Mr. Warren was involved was "to reimburse his landlord, who was fined by the Environmental Control Board for the three night stay." NPR issued a clarification when it recognized its error: "Clarification: While Nigel Warren is contesting the violations issued as a result of his using Airbnb and says he will take responsibility for them, the violations were issued to his landlord."

This doesn't mean hosts who rent are off the hook, but it does mean that if they are violating a "law," it is a private one buried in the terms of their leases. Mr. Warren may have stepped into the case to represent his landlord because he's a great guy or because he wants to stay on "good terms" (as in "in the apartment"), but more likely, there was a clause in his lease stating that if his landlord was fined because of him, he'd assume responsibility. For example:

In the event the Landlord finds that the Tenant(s) or roommate(s) have subleased for any length of time without written permission, Landlord may, in addition to any other remedies it may have (including but not limited to terminating the lease based upon unauthorized sublet), impose additional penalties including recovery from the Tenant(s) of any fines or violations from any government agency that are imposed based upon such sublet.

This is in my friend's lease. It means that if my friend "Airbnbs" her place and her landlord ends up getting fined, the landlord can come after her for reimbursement based on this provision. But if your lease doesn't have a comparable term, or if you don't have a lease at all, well then you have a pretty good case that any fines from the city are not your problem.

Of course, running a hotel out of your apartment is pretty uncool -- your neighbors probably hate it, and your landlord didn't sign up to be owner of one regardless of whether he was smart enough to put that in your lease. As someone who's fortunately always been on good terms with my landlords, a situation that I think has tended to work in my favor (I got a new fridge once!), I wouldn't suggest abusing this technical distinction in the law. But New York City is an expensive place to live in and to visit, and to use the service on sporadic occasions -- as most Airbnb hosts do -- is a different matter.

What's also interesting about all of this is the criticism that Airbnb has garnered for failing to warn users of its site that they may be violating the law. Ron Lieber who reported on the story for the New York Times back in May wrote:

Given that Airbnb is well aware that many of its listings in large cities are probably violating local laws, shouldn't it warn its hosts, with some sort of aggressive pop-up or similar disclosure...?

Lieber wasn't the only person to suggest that Airbnb bears the burden of "letting hosts know" they may be violating the law, but since most of them aren't either because they are renters or because they fall into one of the categorical exceptions (like Mr. Warren did), wouldn't this just amount to a dreadful business move? If there are people possibly violating the terms of their leases with their landlords, what does that have to do with Airbnb? It's like putting the onus on a dating website to make sure that a visitor isn't married, or making Bed, Bath, & Beyond have a big disclaimer at check out: IF YOU HAVE EXCEEDED YOUR VISA CREDIT LIMIT, BEST NOT BUY THAT PILLOW.

Sure, the warning could target a certain audience. It could read, "If you are the owner of the building and filed a certificate of occupancy per section X of the Administrative Code of the City of New York during Y period, and if you are renting under Z circumstances, you may be breaking the law." Now we're starting to get into the territory of fine-print-no-one-reads, and again, it's not going to apply to the bulk of site users, but such a warning at least wouldn't overstate the breadth of suspected illegality that currently pervades the company's reputation.

People's private contracts with one another are just that, which is why the Internet Association's Michael Beckerman, commenting on the organization's amicus brief filed on behalf of Airbnb against the Schneiderman subpoena, likened Schneiderman's action to subpoenaing carmakers for data on who hasn't been wearing seat belts.

Airbnb nonetheless remains public about its ongoing involvement not just in the Warren litigation, but also in the overall public policy struggle to make itself legal across the globe.