Joelle Kraft lived in a rent-controlled one bedroom unit in Venice, California. She had an agreement with her original landlord that permitted her to list the premises on Airbnb:
This Agreement is in addition to the existing lease agreement between LANDLORD and TENANT. This agreement is strictly a written permission allowing Tenant the ability to host Guest(s) through the website airbnb.com at the Tenant’s discretion without violating any Rental Lease Restrictions that may exist in the effective Lease Agreement between Landlord and Tenant . . ..
Turns out though that a subsequent landlord – Louise Chen – wasn’t so keen to the home-sharing idea, and filed an unlawful detainer action against Ms. Kraft in Santa Monica Trial Court. Plaintiff-landlord alleged Ms. Kraft illegally sublet the unit by allowing subtenants and or short term renters to reside there, and sought summary judgment on the grounds Ms. Kraft was operating an illegal bed and breakfast or transient occupancy structure.
Judgment was entered in favor of the landlord, Ms. Chen, and Ms. Kraft, unrepresented by counsel, appealed. Earlier this month the Superior Court, Appellate Division, affirmed.
Plaintiff’s unlawful detainer claim was based upon the theory of illegal purpose, provided for in both the California Code of Civil Procedure and Los Angeles’ Rent Stabilization Ordinance, which permits an action in situations where the tenant is using or permitting premises to be used for any illegal purpose.
Landlord provided evidence (including Ms. Kraft’s deposition testimony) that (i) the unit was located in a zoning area where short term rentals are prohibited, (ii) Ms. Kraft was operating a bed and breakfast and/or a transient occupancy residential structure, and (iii) her use of the premises in this matter was illegal and violated zoning restrictions contained in the Los Angeles Municipal Code. The appellate court determined the landlord consent quoted above was not dispositive because it constituted an illegal contract in violation of existing regulations, and thus was void and unenforceable.
As a tenant (landlords too), it is important to be familiar with applicable zoning laws before engaging in what may be unconventional use of rental property. If you feel the need to request a separate side agreement permitting certain usage of the property, that’s a pretty good sign that local law might have something to say about the conduct too. As demonstrated here, agreements contained in privately negotiated contracts (i.e., leases or ancillary documents) can be rendered void by municipal prohibitions.
Furthermore, and perhaps more importantly, had a loss occurred here involving a home-sharing guest, I suspect potentially applicable insurance policies (landlord’s and/or tenant’s) may have excluded coverage for resulting claims in light of the illegal acts described here. From a risk management perspective, it would be prudent for prospective landlords and tenants to examine potentially applicable insurance policies in addition to local zoning laws before entering into any private agreements.