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.

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  • Susie

    If Anaheim property owners or short term rentals decides to continue to rent short term after August 11 2016, they face steep fines anyway and will lose their permits right away anyway if they don’t meet the many new strict guideline requirements by August 11. They will be sending city inspectors out to pop in audit “check up” on properties from August 11 on to see if the properties that continue to operate are in compliance with all the new requirements to stay in business during the phase out 18 month period. Some of these new code requirements that must be installed and in place inside the short term rental homes by August 11 include:
    Property must have installed an extensive indoor fire sprinkler systems throughout the interior of the home & in the bedrooms for safely to meet the fire dept codes.
    Property must have installed exit doors in each of the bedrooms for emergency exits, to name a few plus many more costly upgrades. If these aren’t in place upon inspections, the owners will get massive fines and lose their permit licenses anyway for not following the laws of these new requirements to be operating as a rental during the next 18 months.
    Who would want to incur all these costs to install indoor plumbing pipes sprinkler systems throughout the attics/ceilings, and tear down walls, framing, stucco, to reframe the house in order to install new doors in each bedroom, and many more expensive retrofit major construction upgrades just to get an extra 1-18 months of rentals? Not us. Even if someone does decide to incur all these costs to risk staying open for 18 more months, they have to pay for costly city permits and pass inspections by the city to make sure they are meeting all the strict building codes as well, a whole other set of codes and requirements. It’s just not worth it. If they come out and all this isn’t in place to their standards, they revoke the permit anyway.

  • Cynthia Ward

    I will take another view and say the City is expecting Air B and B to do what their own staff have been too lazy to do. I have a HUGE stack of docs showing numerous violations by just ONE operator at one address, yet the City looked the other way when they discovered a garage illegally converted to living space, (the City inspector wrote it off as “only play space” when in fact the built in castle feature holds FOUR BUNK BEDS meaning the CHILDREN of visitors to our city were sleeping in potentially unsafe conditions, while the City looked the other way. The files shows the operator being hauled in for a meeting with the City Attorney to address the lack of building permits and then the violations disappear as if a reset button was hit, and despite the numerous complaints about everything from unfinished improvements, parking violations, noise violations, after hours violations, overcrowding, etc. the city STILL issued the operator a license JUST BEFORE THE MORATORIUM KICKED IN. Now that operator insists they have been conferred a set of “rights” to continue operating as an ongoing nuisance to the local neighborhood. This makes me doubly determined to never do business with Air B and B and HomeAway in addition to the operator of STRs I feel certain must also operate in other communities I might be interested in visiting. These are bad businesses forcing their way into communities where they know they do harm and don’t care. So I have NO SYMPATHY for these bad apples, although I do feel bad for some of the operators who bought in not knowing how contentious things were about to get. City staff needs to get off their overpaid butts and DO THEIR JOBS, something we have not seen happen AT ALL in this entire issue. And while Jordan Brandman finally stood with the neighbors in voting to ban them. NONE of this would be happening if he hadn’t shoved through an ill conceived plan to grant special favors to his special friends without adequate due process for a land use issue that never should have gotten this far. From a legal stand point, City staff needs to enforce the laws in place, and not look to a private business to do their dirty work. Staff KNOWS who is operating illegally. Neighbors spend HOURS scouring the internet and turning in the scofflaws, so demanding a business do the work staff won’t do is a weenie way out. And from a business standpoint, we need to ask people PLEASE STOP DOING BUSINESS WITH AIR B AND B AND HOMEAWAY. Make no mistake about it, your neighborhood can be next.

  • kburgoyne

    Does that same argument hold for web sites focused on users posting sales of illegal drugs? What about web sites focused on users trafficking other illegal products and services? There needs to be a distinction between a “general posting” web site like Facebook, versus a “targeted posting” web site like AirBNB. AirBNB inherently knows when a posting is put up within an Anaheim zip code. It’s not like a simple comment being posted on Facebook.

    • David Zenger

      This is a land (mis)use issue. There is no 1st or 14th Amendment issues involved.

  • David Zenger

    “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 websites liable for content created by its users.”

    Hilarious. What a load of crap.