NEW YORK (MainStreet) The sharing economy still has some growing up to do.
It seems like almost every day we hear new horror stories about both renters and hosts on Airbnb, from homeowners who walk in on orgies to renters (such as yours truly) who receive enormous demand letters for fabricated damages (+). The latest comes courtesy of Palm Beach, Calif., where a renter-turned-squatter is claiming tenant's rights over an Airbnb property and refuses to leave without formal eviction proceedings. The worst part is, under California law he may even have a legitimate argument.
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The property is a vacation condo owned by San Francisco rehabilitation therapist Cory Tschogl. Earlier this year she rented it for 44 days to an Airbnb user identified by local news as Maksym Pashanin, from May 25 through July 8. He paid for the first 30 days in advance on a credit card, as the site requires, at $450 per week. That was the last money Tschogl ever saw from him. At the end of 30 days Airbnb notified her that they had had unspecified trouble collecting the remaining balance.
At the end of the 44 days, Pashanin announced he was a tenant and now demands formal eviction procedures before going anywhere. Tschogl told the San Francisco Chronicle, which along with Business Insider broke the story, that she'd had problems with her renter from the very beginning.
"When he first checked in, he complained about the tap water it's hard water with minerals because it's in the desert," Tschogl told the Chronicle. "My guy alarm-bell went off."
After what Tschogl describes as numerous calls, tweets and e-mails, Airbnb eventually compensated her for the missing two weeks rent. When the rental period was up she texted Pashanin to tell him it was time to leave, and that she would shut off the power (usage of which had quadrupled since he arrived) within 24 hours.
That's when things went from bad to worse.
Pashanin replied that he now legally occupies the condo, and therefore Tschogl could not shut off the utilities. He also threatened to press charges against the property owner for "blackmail and damages caused by your negligence and malicious misconduct," according to text messages acquired by Business Insider.
He included in the list of potential damages a $3,800 PID espresso machine and medical bills for his brother who allegedly got sick after drinking the tap water.
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His position is based on a California law that says that an occupant acquires tenant's rights if he stays and pays rent for 30 days. This type of law is fairly common nationwide and is designed to prevent unscrupulous landlords from taking advantage of vulnerable tenants. In low-income housing it's not uncommon for landlords to operate on handshake agreements, then ignore their duties to residents who lack the protections of a formal document. De facto leases, such as California's, protect these paying tenants from issues such as summary eviction, uninhabitable housing or theft.
Telling the difference between a lengthy hotel stay and an apartment does, of course, create problems. Although uncommon, it's certainly not unheard of for people to take trips for weeks at a time, especially on business. That's why housing codes include exceptions for properties that pay hotel taxes and/or meet certain hospitality industry building codes. Renters on Airbnb tend to do neither. Critically, the site seems not to have noticed that problem in its rental agreement.
"Why is this coming up?" said Ronnette Ramos, managing attorney with the Legal Aid Foundation of Los Angeles. "It has to be something to do with that contract. This contract cannot be tight, because if [it was] this never would have gotten out there."
The contract Ramos refers to is the agreement signed between a host and renter on Airbnb, one drafted and provided by the site itself. As a general document for all users, it's not drafted specifically to any given jurisdiction, which can create problems when local laws get ignored.
"Let's say [the contract] is very clear that it's only for 44 days and it does not establish a tenancy," Ramos said. "Well, I think that wins, because the intent is there. The understanding is there."
Without that kind of provision, state law will consider the contract silent on the issue of ongoing tenancy. That's when the housing code takes over. In some places the problem can get even worse than a de facto tenancy. As Ramos pointed out, with generically drafted rental agreements, hosts in rent controlled cities like Los Angeles can violate entire sections of the housing code before the guest even leaves.
"They have to be careful," she said. "That's my takeaway from this whole thing, is that our rules do apply. And contractually you have to have certain things, but take for example the rent control situation. If you have rent control and they meet certain [criteria], well now you have to pay them to get out."
As a tenant, Pashanin gains all of the normal rights and protections provided by the housing code. That means that Tschogl has to provide written notice, time to respond and then wait for her case to wind its way through the landlord tenant court (a streamlined but still chronically overburdened system) before she can kick him out. In the meantime, she has to continue all of the duties of a landlord, including maintaining basic utilities, maintenance and safety on the property. In California, the process can take anywhere from three to six months.
Of course, Tschogl will be entitled to back rent for all of the time that Pashanin occupied the property. If he has assets to seize this could turn into quite a windfall of continuous rental, but in a scam like this it's not uncommon to deal with what lawyers call a "judgment proof defendant." In other words, it doesn't matter what the court awards if a defendant has nothing to collect.
As of now, this is where the matter stays. Airbnb has, according to Tschogl, not only offered to help recoup her legal costs but also offered the squatter a free 30 day stay in a nearby hotel if he would leave immediately. Pashanin refused.
Sharing economy services like Airbnb are experiencing the same growing pains as any other new sector of the economy, exacerbated by their resistance to commercial norms such as local taxes and regulation. Renters on the website need to understand both the hospitality and housing laws in their state and city because, regardless of what the site allows, ultimately any trouble will fall on them.
(+) Airbnb deserves credit for my own experience which it handled both quickly and professionally. They ultimately dismissed the host's claims wholesale for lack of evidence.
--Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website www.wanderinglawyer.com.