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Rental real estate transactions cause discord in some localities

California is reportedly experiencing a housing crisis, which is occurring alongside booming levels of business for Airbnb and similar real estate rental companies. However, short-term renting is not welcomed in many cities in the state. For example, Santa Monica passed an ordinance tightening restrictions against rental real estate transactions and setting up a system of registration of available properties.

In Santa Monica, the owner/s of the property must remain in residence with vacationers and must register their properties with the city. That policy brought a lawsuit from Airbnb and HomeAway against Santa Monica. The suit claims violations of the First Amendment, the Coastal Act and the Communications Decency Act. A U.S. District Court judge recently ruled against the rental enterprises and in favor of the city's ordinance by refusing to grant an injunction against the city ordinance pending further proceedings.

The purpose of the ordinance in general is to prevent local properties from being turned into de facto hotels in violation of the zoning laws and building regulations. The federal court's decision will possibly set a trend allowing for reasonable restrictions on the use of temporary rental properties. Homeowners in the affected areas will in general welcome the restrictions due to a possible drop in house values caused by excessive transient visitors to their local neighborhoods. The rental companies say they will appeal the decision.

The benefit of such property uses, according to the companies, is that they allow middle-class families to visit and see California at an affordable price. That may be true, but what homeowners likely see is an influx of temporary real estate transactions, increased random activities and more congestive traffic in their local communities. Despite the passage of the ordinance in Santa Monica, the city believes that the companies are violating it by not even registering the home shares. In fact, despite the requirement for registration, there were 950 homes and apartments listed on Airbnb during the peak tourism season and only 187 home shares actually registered with the city.

Source:, "City prevails over Airbnb", Kate Cagle, March 16, 2018

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