3 Legal Things You Should Know About AirBnB

 

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AirBnb has become a worldwide phenomenon in connecting property owners to vacationers. Typically, AirBnb provides cheaper accommodations compared with hotels and with better accommodations compared with hostels. However, many users of AirBnb (both property owners as well as vacationers) do not understand the possible legal risks involved with AirBnb. This articles seeks to lay out three main legal risks everyone should know about AirBnb before using it.

 

 

  • AirBnb is not liable to you for anything

AirBnb is just a service website and bears no responsibility should anything go wrong. Looking through the “Terms of Service” agreement you agree to whenever you become a member of AirBnb (something that no one ever looks at), you will see in big bold letters:

“You acknowledge and agree that to the maximum extent permitted by law, the entire risk arising out of your access to and use of the site, application, services and collective content, your listings and booking of any accommodations via the site, application and services, your participation in the referral program, and any contact you have with other users of AirBnb whether in person or online remains with you” (Located at: https://www.airbnb.com/terms)

Essentially, once you agree to these terms, AirBnb is not liable for anything that goes wrong when you use their services. Why this is important? By contrast, hotels (under California law), still bear responsibility to their guests that stay in the hotel. For example, if a fire occurs (through no fault of the guest) and a guest is injured, the hotel’s insurance would most likely cover the cost of the injuries. However, if a fire occurred while staying at an AirBnb property, AirBnb bears no responsibility and the only recourse for the injured guest is to directly sue the property owner (host).

This places a lot risk on the guest because a lot of times the host is not properly insured to cover injuries that occur on the property. Additionally, there is no guarantee that the host has kept a safe property when posting on AirBnb.

 

 

  • Good luck trying to sue AirBnb

Embedded at the end of the “Terms of Service” agreement is what lawyers call an arbitration clause. An arbitration clause is a clause specifying that if you choose to sue AirBnb, you cannot go through the normal court system. Rather, you will have to go through the arbitration process.

Why is this bad? Well, included in the arbitration clause is a “fee clause” that states:

“Your responsibility to pay an AAA filing, administrative and arbitrator fees will be solely set for in the AAA Rules. However, if your claim for damages does not exceed $75,000, AirBnb will pay all such fees unless the arbitrator finds that either the substance of your claim or the relief sought in your Demand for Arbitration was frivolous or was brought for an improper purpose…”

AAA (American Arbitration Association) fee rules states that fees are to be paid by the party bringing the claim (you, the guest) and the filing fee for claims over $75,000 are $1,250 (increasing exponentially depending on amount of claim). Additionally, the arbitration clause dictates the entire dispute resolution process that members are required to follow should you have a dispute with AirBnb. Basically, as a user of AirBnb, you have given up your day in court and will be paying a lot of upfront costs just to bring a claim against AirBnb.

 

 

  • You are bound by California Law

This may not be so bad for California residents, but for people living outside of California, this is terrible. Included at the end of the “Terms of Service” contract, is a “Controlling Law and Jurisdiction” section, which states:

“These terms and your use of the Services will be interpreted in accordance with the laws of the State of California…”

Here is a simple hypothetical. John Doe is from Seattle, Washington and is looking to vacation in Miami, Florida. John Doe books an AirBnb located in Miami. Unfortunately, during the vacation, John Doe slips and falls in the AirBnb due to the property owner’s negligence. John Doe decides to sue AirBnb for not providing safe property. Because of the above clause, John Doe is now forced to use California law to determine whether or not AirBnb is liable even though Washington or Florida’s laws may be more favorable to his case.

While AirBnb is a great service and a service that is highly in demand, make sure you understand the risk involved in using AirBnb. Unfortunately, the “Terms of Service” agreements are impossible for consumers to change, but with this knowledge you can better protect yourself when using AirBnb.


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Eric Ching

Eric Ching, Esq. - Real Estate Attorney

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  1 comment for “3 Legal Things You Should Know About AirBnB

  1. March 30, 2016 at 3:30 pm

    Nice article Eric.
    Thank you for taking the time to point out these risks.

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