Airbnb and HomeAway Sue Anaheim Over Short-Term-Rental Ban

Airbnb and HomeAway, two websites that host online listings for short term rentals and home shares, filed lawsuits last week against the City of Anaheim for an ordinance that fines websites for hosting the ads of home shares operating without a city permit.

The lawsuits come nearly a month after the city council passed a permanent ban on all short-term rental homes — which does not include residents who rent out portions of their home — giving the existing 363 permitted rental operators 18 months to phase out their businesses.

City regulations require sites to remove listings of rental units that don’t have permits that violate city law within 10 days, or face fines of $500 for the first offense, $1,000 for the second and $2,000 for a third or subsequent offense.

Airbnb, in a lawsuit first reported by the Los Angeles Times, claims that the city law unfairly holds hosting websites responsible for making sure third parties comply with city regulations.

A day after Airbnb filed its suit, the Orange County Register reported that Airbnb’s main competitor, HomeAway, also filed a complaint.

Both lawsuits say the city’s regulations violate constitutional rights to free speech and equal protection, as well as the 1996 Communications Decency Act, which prohibits states and local jurisdictions from making websites liable for content created by its users.

The lawsuits in Anaheim come just a month after Airbnb filed a lawsuit against the City of San Francisco over a city law that would fine the company $1,000 a day for every unregistered host. 

The laws are a response to a boom in short term rentals in neighborhoods around the Anaheim resort district and other parts of the city to accommodate tourists and visitors to Disneyland and the Anaheim Convention Center.

The city initially created a permitting process to tax short term rentals, but after complaints from residents about noise, traffic and disturbances created by renters, the city passed a moratorium on issuing new permits.

Opposition to the short term rentals culminated in a city council vote last month to stop issuing short-term rental permits altogether, giving existing permits an 18 month period to stop operating their businesses and imposing new restrictions on noise, occupancy, parking and fire safety.

Members of the Anaheim Rental Alliance, a group representing short term rental owners, have also considered a lawsuit challenging the 18 month phase-out period, arguing that the period should be extended based on their legal right to recoup their losses on investments into a property made under a city permit.

Contact Thy Vo at tvo@voiceofoc.org or follow her on Twitter @thyanhvo or at Facebook.com/reporterthy.