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Short-Term Rental Update: First statewide short-term rental regulations signed into law in Massachusetts; Startups receive influx of funding signifying future collaborations in the industry

This week, the first statewide short-term rental regulations were signed into law in Massachusetts with a number of crucial details. We also note that big money is moving into the startup funding world, which indicates potential future partnerships in the industry, including those between short-term rental giants like Airbnb and co-working communities.

Regulatory & Legal Developments

Massachusetts governor signs law regulating short-term rentals
Smart Cities Dive - News on Jan 2, 2019
Massachusetts will be the first state to require short-term rental hosts to register, pay excise tax and carry insurance.

Transactions & Investments

The Wing gets $75M from Sequoia, Airbnb
TechCrunch on Dec 19, 2018
The Wing, the inspirational New-York based network of work and community spaces designed for women, announced a $75M round of funding. Airbnb, a company that does not regularly invest in startups, and WeWork, are two of the investors in The Wing.

WeHo short-term rental startup AvantStay snags $5M in funding
Real Deal - LA Real Estate News on Dec 20, 2018
AvantStay, a platform that offers short-term rental options for group travel, recently won $5M in funding to further expand its technology initiatives.

Other news:

Industry News

The Kafkaesque experience of getting banned for life from Airbnb
Boing Boing - Technology Blog on Dec 20, 2018
Cat furniture maker Jackson Cunningham was banned for life from Airbnb, and the company wouldn't tell him why. In his essay , he compares his experience to the nightmarish Black Mirror episode, White Christmas . Here's an email that Airbnb sent Jackson: Dear Jackson, We regret to inform you that we’ll be unable to support your account moving forward, and have exercised our discretion under our Terms of Service to disable your account(s). This decision is irreversible and will affect any duplicated or future accounts. Please understand that we are not obligated to provide an explanation for the action taken against your account. Furthermore, we are not liable to you in any way with respect to disabling or canceling your account. Airbnb reserves the right to make the final determination with respect to such matters, and this decision will not be reversed . Jackson followed up with Airbnb customer support and received the following reply: Hi Jackson, Please understand that we are not obligated to provide an explanation for the action taken against your account. Additionally, we consider this matter closed and will no longer reply to any inquiries regarding your account. Jackson decided to try to find out why he was banned. As far as he can tell, it was because he wrote a review of one of his stays on Google, and Airbnb only allows reviews on its own platform.

Airbnb making new push for smoke alarms, carbon monoxide detectors after recent deaths Hotels on Dec 19, 2018
Airbnb will alert guests before they book a property if the host hasn't reported having a smoke or carbon monoxide alarm.

Regulation & Legal Developments

Pam Bondi: ‘Sleeping quarters’ don’t qualify as vacation rentals
Florida Politics on Jan 2, 2019
In Florida, a “vacation rental” has to have a sleeping area, a kitchen, and a bathroom all under the same roof. That’s the crux of an advisory opinion issued Wednesday by Attorney General Pam Bondi. Her analysis potentially provides cities with a new – albeit narrow – opportunity to limit vacation rentals. That would be a major change for cities that largely lost new authority over vacation rentals in 2011, when the state essentially banned new local laws on vacation rental properties. According to Bondi, municipalities can forbid homeowners from marketing a structure that are basically just a bedroom and bathroom as a vacation rental, even if they’re otherwise allowed under city ordinances.

Lake Tahoe’s Vacation Rental Law Put on Hold
Courthouse News on Dec 27, 2018
The city of South Lake Tahoe said on Wednesday it would comply with a court order to halt the implementation of a law that set significant restrictions on vacation rentals within city limits. The law, which could have major precedent implications in how California towns can legislate short term rentals obtained through websites like Airbnb and VRBO, was passed after city residents narrowly approved Measure T by 58 votes in November. Measure T placed a moratorium on the ability of the city to issue any new vacation rental permits to private residents or business owners seeking to rent out their houses or apartments to visitors and called for the closure of a slew of currently operated short term rentals by 2021. The ordinance applies only to structures outside the designated tourist core. Soon after the city began to implement the new restrictions, a group called the South Lake Tahoe Property Owners Group filed suit in El Dorado Superior Court, claiming the law discriminates against property owners who are not “permanent residents” among other issues.

San Leandro crafting rules on short-term rentals
East Bay Times on Dec 20, 2018
The city is hashing out possible rules on short-term rentals such as Airbnb, but one thing is clear: Those who violate the regulations can likely expect stiff penalties. A first-time offense would be a misdemeanor and trigger a $1,000 fine or six months in jail, a punishment the City Council agrees should be part of the regulations. A second offense could cause a property lien and additional fines, including a requirement to pay the city’s legal fees. A third offense would strip a violator forever of the option of using the property as a short-term rental, which the city defines as less than 30 days. City Councilwoman Corina Lopez said regulations and penalties should be “as robust as possible” if the council adopts an ordinance. “I have made my position clear,” Lopez said at a workshop Dec. 10, when city officials offered suggestions on what the ordinance might contain.


Cops create special squad to act fast on out-of-control Airbnb parties
The Age National Headlines on Dec 28, 2018
A new "disruptive party" police squad will be out in full force on New Year's Eve and beyond to quell violent and rowdy gatherings in short-term rental properties. The new police team has been set up in response to a string of out-of-control parties in rented properties in recent months, including one in which police broke up a gathering of up to 200 teenagers, some armed with knives, at a Point Cook property rented by a 15-year-old boy. Deputy Commissioner Shane Patton said officers at the high-tech Monitoring and Assessment Centre were trawling the internet for any signs of short-term rental apartment parties that could potentially get out of hand. The centre, which went live for the first time last New Year's Eve, gives police real-time access to information, including CCTV footage and social media. “But in the event we have an Airbnb party, as they’re loosely described, what we do … is we have implemented teams who will be able to go and disrupt those parties,” Mr Patton said.

Some owners defy crackdown on illegal Las Vegas short-term rentals
Las Vegas Review Journal - Business on Dec 22, 2018
As Las Vegas officials enact stricter policies and set up ways to better report and track illegal home-sharing, there is a growing sense from City Hall that those efforts aren’t being taken seriously. Two fines totaling $200,000 levied earlier this month — the largest penalties against operators since at least 2015 — are emblematic of the city’s escalating war on unlicensed short-term rentals and reflect frustration with homeowners who have repeatedly skirted ever-tightening rules. Offenders often ignore cease-and-desist orders, continuing unlawful operations for up to 200 days, and have paid only a fraction of the $465,000 in penalties levied over the past four years, according to city data analyzed by the Review-Journal. “This has been going on for a long time: repeated ignorance on purpose, apparently, of our notices, of our inspectors,” Councilman Bob Coffin said earlier this month, lamenting one case of long-term defiance. The number of cases opened has steadily risen each year since 2015 and nearly all fines during that time have stemmed from cases launched in the past two years. But in a city where there are more than 1,100 illegal short-term rentals — more than five times the number of lawful ones (192) – division exists among city leaders over whether the current combative strategy is the most effective. Two measures narrowly approved The last two major policy decisions to rein in short-term rentals were passed by 4-3 margins. In June 2017, the City Council enacted a special use permitting process for would-be rentals. Then it limited new permits this month to owner-occupied homes — leaving just a small number of applicants — which is likely to significantly restrict the growth of the future market. “Who wants to stay in an Airbnb where the owner’s there?” Councilman Stavros Anthony said this week.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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