LA Sues Hosting Platform Vrbo Over Failure To Enforce Short-Term Rental Rules

The city of Los Angeles is suing the popular vacation rental platform HomeAway.com, now branded as Vrbo, for allowing hosts to book guests without registering under the city's short-term rental ordinance.

The ordinance was passed in December 2018 in an effort to reign in the explosion of vacation rentals made popular with online home-sharing sites like Airbnb.

"It's motivated by the fact that we're in a housing crisis," City Attorney Mike Feuer said of the lawsuit, which was announced Monday. Feuer noted that decreasing housing supply and rising rents largely propelled the ordinance.

"[The home-sharing ordinance] was designed to strike some balance," Feuer said. "And if people are violating it, they're violating that balance, and they're unfairly taking advantage of those who are abiding by the rules."

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L.A. requires property owners to register with the city if they want to rent out their homes for stints of 30 days or less. They must also pay a nightly rental fee to the city and collect transient occupancy taxes from guests. The rules also prohibit owners from renting their homes out for more than 120 days per year.

Booking platforms like Vrbo are required to ensure that hosts are registered with the city and that they don't go over their annual allotment of rental days. Feuer, who's also running for mayor, said the city's planning department gives vacation rental platforms lists of people authorized to rent their homes on a daily basis.

He said Vrbo, unlike some other popular platforms, didn't seem to require hosts to show they've registered with the city before processing a booking. He said around 29% of bookings made in a recent 30-day period appeared to violate the city's rules.

"That suggests that there may be thousands of prohibited transactions that HomeAway has processed since the ordinance took effect," Feuer said.

Rental Transgressions

The lawsuit is the city's first against a rental booking platform since it passed its short-term rental ordinance in December 2018. But hosting platforms have been the subject of legal challenges and ordinances in municipalities throughout the county, in a bid to prevent further problems for the housing market.

About 22% of short-term rental bookings in L.A. are made through Vrbo, according to Feuer.

The city is seeking an injunction that would prohibit HomeAway from processing any further bookings that violate the short-term rental ordinance. It's also seeking fines of up to $2,500 per violation.

Note: LAist reached out to HomeAway's parent company, Expedia Group, but has not received a reply. We will update this post if and when we hear back.