HomeAway Sues San Francisco Over Home Sharing Law

Vacation rental service claims new home-sharing law is discriminatory and unconstitutional because it bans second-home owners from short-term property rentals.
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HomeAway, an online vacation rental service, on Monday filed a lawsuit against the City of San Francisco to halt the implementation of the city's new short-term rental law, claiming that it discriminates against second home owners and favors AirBnB.

"In a community known for promoting equality and an entrepreneurial spirit, it is shocking the Supervisors passed a law that, in our opinion, stifles opportunity in such a discriminatory manner," said Carl Shepherd, co-founder of HomeAway, in a statement. "In its apparently single-minded goal to 'legalize Airbnb,' we claim the Supervisors ignored the benefits of responsibly regulating a well-established industry, and embraced an unconstitutional and unenforceable regulation."

Peer-to-peer home-sharing services like AirBnB have created challenges for regulators and hospitality companies around the country, just as other sharing economy services such as Lyft, SideCar, and Uber have done in the transportation industry. In New York, for example, Attorney General Eric Schneiderman last month released a report claiming that 72% of AirBnB rentals appeared to violate state and local laws.

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San Francisco took a similar stance until last week. On Oct. 27, San Francisco Mayor Edwin M. Lee signed the Short-Term Residential Rentals Ordinance, a measure approved by the City's Board of Supervisors, to regulate home and apartment sharing through online services such as AirBnB.

Lee characterized the law as a clear set of rules that will allow San Franciscans who want to share their homes with occasional visitors to earn extra money and enjoy better quality of life while allowing the city to regulate bad actors, protect the public, and collect millions of dollars in tax revenues.

The law attempts to support home sharing while preventing "the conversion of residential housing into full-time de-facto hotels." It allows the primary resident of a unit -- owner or tenant -- to apply for permission to rent the unit, provided he or she does so for no more than 90 days per calendar year and lives in the unit no less than three-quarters of the year.

HomeAway objects that the law bans second-home owners from short-term property rental while allowing tenants of second-home owners to do so. It also objects that the law "requires people to make their properties available only through online services that don't have to let customers know who's renting their property until the platform collects and holds their money." The company argues that the law's wording effectively outlaws all but one business model in San Francisco.

HomeAway contends that second home owners should have the same rights as primary home owners.

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