Personal injury attorney Matthew Breen of Lowcountry Law doesn’t see them every day, but he knows that short-term rentals are causing an influx of cases.
“You’d be surprised how many times it happens,” the Mount Pleasant, South Carolina, attorney said. “Out of a hundred safe, uneventful stays, you have one that might be super-serious, but if you are the one who is seriously injured, then it really matters to you.”
It increasingly matters to attorneys as well, since they are seeing a growing number of matters dealing with properties listed on platforms such as Airbnb and Vrbo. These can interact with an unexpectedly diverse array of legal practice areas, encompassing not just premises liability but also real estate, zoning and even privacy.
Some of those matters gain enough prominence to attract media attention. In September, according to South Carolina’s The State newspaper, an Aiken County judge and jury awarded $45 million to a couple allegedly videotaped by an Airbnb host while having intimate relations. Moreover, property renters on the platforms aren’t the only ones who might find themselves in need of a lawyer. This summer, WTVD-TV in Durham reported on the case of an Airbnb host who found herself having to take squatters to court after they refused to vacate her property and put up a handwritten sign announcing, “We are legal residents of this home.”
On the personal injury end of the equation, Breen said it is hard to gauge how many cases there are.
“I think it is growing somewhat just as coastal South Carolina grows more,” he said. “There’s Airbnbs and Vrbos everywhere.”
Duties and repercussions
No one has to tell that to Joe Sandefur. The Myrtle Beach, South Carolina, attorney for Morgan & Morgan said he handles many short-term rental cases, and that the field is still evolving, particularly on the thorny issue of whether a rented property qualifies as someone’s home or as a business. As a plaintiff’s personal injury attorney, he always argues the latter.
“The duty owed by a private residence is less than the duty owed by a corporate or commercial landowner,” he said. “So, when you get an Airbnb involved, it takes a residential location but the way that we argue it is that it turns it into a commercial property because it is obviously for profit.”
Moreover, residential construction isn’t always assembled to commercial property standards.
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“You’ve got a balcony designed for residential load, and someone has a family reunion and puts all 20 people on the deck to get the family photo, and it collapses,” he said, giving one hypothetical example. “Our argument is that you’ve got a responsibility to periodically inspect the safety of the premises.”
But, even if they do keep an eye out, he said, ordinary homeowners often aren’t as sensitive as conventional lodging establishments to potential sources of litigation such as rusted nails, weakened bolts, cracked wood or dry rot.
Regardless, if a guest is injured, the owner might find that the plaintiff is classified as an invitee owed an affirmative duty to identify and protect against harm, a far different standard than if you simply had a friend over to your home.
“Because the phenomenon is pretty new with these Vrbos and Airbnbs, there’s no specific case in South Carolina that definitively says what it is,” he said, “but our experts take the opinion — and I think it is the right opinion — that it falls into the category of a commercial property.”
He often looks for code violations. Staircases can be particularly problematic if they lack handrails or have steps out of tolerance. But anything from uneven pavers to unreasonably slippery bath tile can be an issue.
“They just don’t know,” he said of property owners. “They don’t understand what some of those repercussions are.”
Tip of the spear
One thing that Sandefur understands is the insurance — and that the big names in the industry provide it. According to their websites, Airbnb and Vrbo give hosts a hefty $1 million liability policy. Sandefur said that the platforms themselves are rarely named as direct parties in lawsuits, but the policies they provide create an opportunity for recovery.
“What they offer is another layer of insurance,” he said. “A lot of times what you’ll have are two carriers. You’ll have the individual homeowner’s carrier. Then, you’ll have the Vrbo or Airbnb policy that will step in and defend in the shoes of the owner.”
A representative for Airbnb declined to be interviewed on the record but referred questions to the company’s website, which has information on a variety of issues.
According to the website, hosts are expected to follow certain guidelines, including properties being free of “health and safety” concerns such as pests or mold. It also asks that all listings be equipped with smoke alarms and carbon monoxide detectors if the property has fuel-burning devices. Free alarms can even be sent to hosts who need one.
Of course, a guest’s lawsuit isn’t the only worry a short-term rental owner might face. Municipalities have become battlegrounds over zoning issues related to pop-up lodging. Asheville for instance, banned such “whole home” rentals in 2018, permitting them only in its resort district.
“We had more short-term rentals per capita in Asheville than anywhere in the United States,” City Attorney Brad Branham said. “So, we were absolutely at the spear’s tip of the short-term rental market growth.”
Branham, who has conducted continuing legal education programs on the topic, said that the rapid growth of the phenomenon fostered fears of rising housing prices and declining availability, which prompted the new regulations. Still, the ban was carefully crafted to grandfather in those who were already renting properties on the platforms. It also exempted what are termed “homestays,” in which the owner remains on the premises during the rental period.
“It tries to prevent, in many cases, what I’ll call the ‘institutional investors,’ the second home investors who are doing it purely for economic gain because we don’t, as a locality, see a ton of that particular benefit,” Branham said. “That’s benefiting individuals who often don’t even live here. That money’s going outside.”
Of course, not everyone was happy with the new restrictions. Branham said the ordinance was challenged — and upheld — early on.
Limits on authority
Yet, law and precedent limit municipal rulemaking in North Carolina. This was clarified in Schroeder v. Wilmington, a case that struck down part of Wilmington’s 2019 ordinance on the issue. The North Carolina Court of Appeals allowed cities to use their zoning power to limit the spread of short-term rentals but prohibited registration requirements and permitting processes due to certain provisions of state law. That means a locality can still regulate activity, but it cannot force owners to tell the government about it.
“Quite frankly, that makes it harder to enforce because we have less information about who is out there doing that,” Branham said.
Not surprisingly, Branham noted that “compliance issues” have arisen with parties strategically posting and removing listings or altering geographic pin locations to confuse authorities.
“Enforcement is always a challenge,” he said. “The cat-and-mouse game is unbelievable.”
Camekia Hammond, a residential real estate attorney with the Hutchens Law Firm in Charlotte and Columbia, South Carolina, said that these issues are increasingly prevalent as people contend with high traffic, potential noise complaints and even increased criminal activity that might accompany a more transient population.
“It is going to be different traffic all the time versus a family renting your house,” she said.
She said variances are possible in some instances for long-standing uses. Regardless, if you are buying a property for that purpose, it is best to check local regulations and make sure what you are planning to do is permitted.
“Even just getting the mortgage for an Airbnb, you have to be transparent with the lender because there are different issues that could arise with your interest rate,” Hammond noted. “There is a higher interest rate because it is not going to be your primary residence.”
Yet, the biggest roadblock might not come from litigious guests, nervous mortgage companies or city hall but from the local homeowners association. If such an association forms or changes its rules after the fact, it might leave an angry short-term rental owner in court.
“You have people that are suing the HOA because they are like, ‘I didn’t have a problem renting my home before,’” Hammond said.
How tolerant a given area is can vary widely.
“The hard part about all of this discussion is that we always want to paint with a very broad brush,” said David Wilson of Law Firm Carolinas, “but the message that I’ve received and sent over the years is that no two communities are exactly the same.”
Wilson, a Charlotte-based partner who represents HOAs in both states, said that battles between associations and rental owners relate to ancient struggles between individuals arguing for personal property rights and neighbors enforcing local standards to maintain their living environment.
If the rules change, the HOA’s contention is simple enough.
“The argument goes that if you were an owner who bought into the neighborhood, you bought in with knowledge that the covenant could be changed,” Wilson said. “As long as they were changed correctly then you have to abide by that.”
But it isn’t always so straightforward. Wilson said that a North Carolina short-term rental owner might make a “reasonableness” claim about any new amendment.
“In other words: ‘I moved here. Here was my set of covenants, and this is what I was expecting. It wasn’t reasonable for it to change in a substantial kind of way,’” noted Wilson.
He said measures of reasonableness can vary but they might include looking at how radical a change a given amendment might represent. If it is a total departure from previous rules, then the homeowner’s case against it will be strengthened.
“I think you will get a very different result if you’ve got an association that already has rental restrictions of some kind, and they are just amending or tweaking the language,” he said.
He said that often HOAs might try to work with an Airbnb or Vrbo host by grandfathering them in. Others might enforce a new rule after a certain period of adjustment or after the conclusion of a lease.
He said one possible avenue is to determine what the HOA is really trying to prevent — such as noise or parking issues — and make the regulation center on that instead of on the rental issue. An enforcement mechanism might even include a certain threshold number of complaints before an owner loses the right to rent.
“There are different ways of attacking it, all with the goal of trying to encourage the people who are renting out their properties to be better landlords and pay attention to their tenants,” he noted.
Regardless, he tries to avoid litigation.
South Carolina has less case law on the matter, but one thing is usually true: HOAs are often perceived negatively — including by judges and juries.
“With most HOAs, the advice I give them is that you are not normally the sympathetic entity in a case,” he said. “It is always the big, bad HOA against poor Sally, who wants to just make a living renting her home. That’s the context that we usually look at.”
Moreover, Wilson said that the dynamic, both nationally and in the Carolinas, has tended toward property owners.
“There seems to be an understanding and a trend that leasing will be permitted, and if you want to restrict it, the HOA is going to be limited in the ways that it can restrict it,” he said.
Being good neighbors
The Airbnb website said that the company has measures in place to respect neighborhoods, and it details “community disturbance policies” that prohibit users from “disruptive parties” or other events that could disturb others. It said that open-invite gatherings are banned, and that forbidden disturbances can include anything from excessive noise and too many visitors to problems with smoking, littering, parking, trespassing or vandalism. Certain reservations also might be blocked if the platform deems them to present a high risk of “unauthorized parties.”
Automated systems looking at a number of factors work to assess listings for signs of a “higher party, personal safety, or property damage risk.”
“Where a listing is advertised as party or event friendly, we may suspend the listing until the violating content is removed,” the site said, adding that Airbnb also might act in a situation where a host declares an unreasonable occupancy limit.
The company has “neighborhood support” contact procedures in place for those who wish to report problems or concerns 24/7, and it has partnered with a property tech company in some regions to offer noise sensors to hosts.
Though Airbnb previously allowed indoor security cameras in common areas of listings as long as they were disclosed, clearly visible and not in bathrooms or bedrooms, the site said that policy has changed; all indoor surveillance equipment is now prohibited by the platform.
Wilson said legislation is proposed in both states almost every year, but nothing has bubbled to the top of lawmakers’ agendas. Branham agreed, noting that legislation now seems the preferred tactic for those looking to fight regulations.
“The lawsuits still come from time to time,” he said. “But the new strategy has been to bypass lawsuits and just try to go and lobby the General Assembly to remove this authority.”
He said none of these attempts have borne fruit, but the issue isn’t going away.
“It is something that is going to be a bigger impact next week, next month and next year than it is today,” he said.
Contacted for comment on this report, Vrbo did give an initial response requesting more information but did not respond to follow-up emails by press time.