On October 21, 2014, the San Francisco Board of Supervisors passed the final version of an ordinance that will allow short-term rentals through hosted on-line platforms such as AIRBNB. Mayor Lee is expected to sign it and it will become effective on February 1, 2015.
Under prior law, short-term rentals were deemed a commercial use and prohibited in residential neighborhoods without a conditional use permit similar to a hotel-operator's permit. Enforcement was lax, and, despite the law, short-term rentals in residential units proliferated throughout San Francisco. Property owners kept units available only for short-term rentals, and tenants sub-rented rooms or entire units.
The new law legalizes short-term rentals by permanent residents, either owners or tenants, for a period of up to 90 days per year. Residents intending to rent on a short term basis must register at the San Francisco Planning Department, pay a registration fee, and obtain liability insurance. Residents must also pay a short-term rental tax. Tenants under rent control may not charge their short-term sub-tenants more rent than the amount payable under the master lease. The unit must have certain safety information posted, and the resident must keep compliance records for two-years.
Units which are not owner-occupied or tenant-occupied may not be used for short-term rental. Owners who do not reside in the unit may not offer the unit for rent for periods of less than 30 days. The ordinance thus prohibits the practice of holding units available only for short-term rentals.
The law does not override lease provisions that prohibit subletting without the landlord's consent. A tenant under such a lease who sublets without the landlord's consent is subject to eviction under the "just cause" provisions of the San Francisco Administrative Code. Typically, the landlord would commence the eviction process by serving the tenant with a 3-day notice to cure or quit. Landlords may wish to remind their tenants that short-term rentals without consent are prohibited under applicable lease provisions. Many tenants object to short-term rentals by their neighbors because of noise, other nuisances, and security issues. In short, tourists party more than permanent residents.
Short term rentals by tenants for more than 90 days per year remain illegal. Previously, even in the absence of a lease prohibition against subletting, a landlord could have served a tenant with a 3-day notice to quit on the ground that the tenant is using the unit for an illegal purpose, i.e. a short-term rental in violation of applicable zoning provisions. Under the new law, a landlord may serve an eviction notice only if the short-term rentals cumulatively exceed 90 days per year, and may only serve a 30-day notice to cure, rather than a 3 day notice to quit, for the first such violation. The 30-day notice provision does not apply to the second or subsequent violations of the 90 day limit, and in such instances the landlord may serve a 3-day notice.