Is Virginia Bill Threatening Airbnb Hosts The Most Oppressive In The Nation?

by John Kartch | Forbes.com

Virginians who rent out their homes or bedrooms on platforms like Airbnb could soon find their freedom to do so severely curtailed by a recently introduced state Senate bill. The bill is a collection of requirements that amount to perhaps the most oppressive state property rights restriction on the sharing economy nationwide.

Virginia Senate Bill 1579 was introduced Jan. 20 and threatens hosts with a raft of burdensome and unrealistic regulations and a $10,000 fine per infraction.

Yes, ten thousand dollars.

If you are among the many Virginians who make ends meet by listing your home or bedroom on a homesharing platform, prepare to take the following steps if the bill becomes law:

Step 1: You must track down all owners of all adjacent properties and notify them, in writing, that you are thinking of renting out a bedroom or home. Yes, your mere intent must be reported in writing to each of them. You might be saying to yourself, “But this is my home, and it isn’t anyone’s business if I choose to be a host!” Too bad.

Let’s look at the bill text:

If the short-term rental of residential dwelling units, or space within a residential dwelling unit, is authorized by a locality, the locality shall require:

That the operator provide written notice to all landowners with property adjacent to the residential dwelling unit of the intent to offer the residential dwelling unit for short-term rental.

The bill summary self-righteously claims the legislation is about “affirming local control” but instead the bill bluntly dictates to localities exactly what they “shall require” and it isn’t pretty.

Step 2: You must officially request, and receive, permission from the government.

Mother May I? The bill requires:

That the operator request and obtain permission of the locality to offer a residential dwelling unit for short-term rental.

Hmm. Did you remember to send a check to the mayor’s campaign fund? It’s not too late.

If the Powers That Be are merciful and bestow a blessing upon your application, you may proceed to the next requirement on the list.

Step 3: You must buy at least $500,000 in “commercial premises liability insurance.”

The bill requires:

That the operator offering a residential dwelling unit for short-term rental maintain a minimum of $500,000 in commercial premises liability insurance that covers all renters, third parties, and, for purposes of any damage that might be caused by a renter, persons and property immediately adjacent to the residential dwelling unit.

So the bill is saying that this basic residential use of your house or apartment makes you a commercial enterprise. Doesn’t make sense.

And how much will this new requirement cost? You’ll no doubt have plenty of time to do a cost-benefit analysis after getting pitched by several of your local friendly commercial premises liability insurance agents. Fun.

Step 4: Determine if your hosting platforms have gotten into compliance with all state laws governing real estate brokers.

The bill states:

If a hosting platform facilitates the short-term rental of residential dwelling units in the locality, or collects payments for such transactions, such hosting platform shall comply with all applicable laws of the Commonwealth related to real estate brokers and the offering of property for rent in the Commonwealth.

The imposition of onerous and unnecessary occupational licensing schemes is but one tactic politicians use to stifle sharing economy platforms and participants and prop up entrenched industry players.

Step 5: Realize the bill may have automatically banned short term rentals in your area. The bill is written in such a way that short term rentals could, by default, be prohibited statewide except in localities that have taken action to expressly authorize them. This brings us to the $10,000 question. Let’s look at the bill again:

If a locality prohibits the short-term rental of residential dwelling units, any person or entity, including a hosting platform, that advertises or promotes such a rental in the locality shall be subject to a $10,000 fine for each violation, payable to the locality.

So the bill uses the word “If” both ways:

-“If” short term rentals are “authorized” by a locality, then you can apply for permission from the government to be a host and plod through the steps outlined above.

“If” short term rentals are “prohibited” by a locality, then you will pay a $10,000 fine if you dare list your rental.

But what if your locality has neither expressly authorized nor expressly prohibited short term rentals? If the default position of the law is that the activity is prohibited, then your listing would trigger the $10,000 fine.

Are you willing to take such a risk? Do you want to pick up the phone and discuss this matter with the city attorney? It’s a safe bet many city attorneys will consider the activity prohibited by default.

Considering the requirements outlined above, are you going to go through the trouble of renting out your bedroom in order to pay some bills or save for a vacation? Maybe you just wouldn’t bother with it. Maybe that’s the point of the bill.

The bill was filed by State Senator William M. Stanley, Jr. and referred to the Committee on Local Government, of which Stanley is chairman. A committee hearing on the bill is set for this Tuesday, Jan. 31 in Richmond.

“I wouldn’t say it’s a sledgehammer measure,” said Senator Stanley of his bill.

Virginians could be forgiven for thinking otherwise.

Follow the author on Twitter: @JohnKartch