Maybe you’ve heard the buzz in the news lately about the City of Chicago cracking down on Airbnb rentals, and wondering how that will affect your plans to share your hip space with weary travelers or exotic adventurers. Well, like all things city government, the rules are complex and dizzying.  For example:

• Buildings of less than five units can only have one unit listed online at a time.
• Larger buildings are capped at six units or 25%, whichever is less.
• Persons wanting to exceed the smaller building limit have to prove they are suffering “an extraordinary burden.”
• In single-family home neighborhoods, individuals may petition to outlaw new listings in such homes, or otherwise limit the availability of listings to primary residents. In other words, trying to avoid Airbnbs owned by professional real estate investors.
• Of course, counter-petitioners can try to get any such enacted ordinance overturned.
• No more than 90 nights rented in a calendar year.

Not surprisingly, there is a 4.5% tax (on top of the 17.4% hotel tax!) on each rental to fund services for the homeless, and each Chicago address is charged $60 to be listed on the website. Airbnb has to pay a $10,000.00 “licensing fee.” There are also specific insurance and licensing requirements for Airbnb hosts, which will require some legwork and expense.

From a more practical standpoint, you want to be sure you understand what operating an Airbnb means for you as a homeowner, or as a tenant of someone else. If you own your home, of course, there are less restrictions, but if you are a renter, your lease may prohibit sub-leasing or any type of “short term” subleasing… more and more landlords these days are cracking down and preventing their tenants from using the space as a hotel.

If you own your home, your primary concern should be with obtaining appropriate insurance coverage. If you have a standard homeowner policy, there is likely an exclusion for “business activities” – and running a short-term rental is just that.  Even if you have a “landlord policy,” there may be an exclusion that would prevent coverage for your short-term rental. Make sure you have the appropriate policy, and you may want to consider a “commercial umbrella” policy. Also consider if you have the resources to hire an attorney if you have a guest that refuses to leave or damages your property. Crazier things have happened! Check out this link if you’re not convinced:

http://www.huffingtonpost.com/2014/07/29/airbnb-horror-stories_n_5614452.html

You should also consider, on a more personal level, what you hope to get out of hosting. Are you just in it for the money? Do you want to make new friends? Are you willing to take the risk involved with allowing strangers into your home? Do you have the time to commit to becoming a good host, handling housekeeping and fielding multiple requests/emails in a day? What makes your unit special? Will your neighbors be affected?

If you have questions about shared housing, navigating the new regulations during an attorney review, or run into issues with your renters, contact us today!