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City of Santa Monica prevails against Airbnb and HomeAway in court

The Ninth Circuit Court of Appeals today affirmed the City of Santa Monica’s Home-Sharing Ordinance in the face of a challenge brought by Airbnb and HomeAway.com. This ruling confirms the City’s right to regulate home sharing in order to protect its limited housing stock for residents.

The district court and now a unanimous panel of three Ninth Circuit judges have agreed that the City’s Home-Sharing Ordinance is a lawful housing and rental regulation with the “central and significant goal” of preserving the City’s “housing stock and preserving the quality and nature of residential neighborhoods.”

“We are thrilled to have confirmation from the Ninth Circuit that our balanced approach to home sharing is working at a time when housing and affordability continue to challenge the region,” said Santa Monica Mayor Gleam Davis. “This is a big win for Santa Monica residents and our residential neighborhoods.”

This decision affirms the district court’s dismissal of Airbnb and HomeAway’s claims that the City’s Home-Sharing Ordinance violated the Communications Decency Act and the First Amendment.

City Attorney Lane Dilg said, “The Santa Monica City Attorney’s Office is pleased that the Ninth Circuit has unanimously upheld the City’s Home-Sharing Ordinance. This critical local law prevents residences in our community from being converted into de facto hotels; it protects affordable housing and it helps residents stay in their homes. As the Ninth Circuit itself has said, the Communications Decency Act does not ‘create a lawless no-man’s land on the internet.’ We look forward to collaborating and cooperating with technology companies to advance the community’s best interests, but the platforms’ broad assertions of immunity in this case simply go too far.”

The City was represented in this case by attorneys from the Santa Monica City Attorney’s Office.

Home-Sharing in Santa Monica

After maintaining a multi-decade prohibition against short-term rentals in residential districts, in 2015, the City eased this prohibition by authorizing a form of short-term rentals known as home-sharing, which permits City residents who obtain a City license to host visitors for compensation for a period of less than 31 days, as long as the resident and visitor are both present in the home. Un-hosted short-term rentals of residential housing, known as vacation rentals, remain unlawful in Santa Monica. This legislation struck an important balance by enabling current and prospective residents to supplement income through home-sharing to meet increased rents and housing prices, while ensuring that Santa Monica’s housing units, and particularly affordable units, would not be surreptitiously or openly converted into de facto hotels.

As amended in 2017, this legislation also imposes modest regulations on businesses, such as Airbnb and HomeAway, that engage in booking transactions for short-term rentals of housing units for profit. The City’s ordinance prohibits such businesses from providing and collecting a fee for booking services for unlicensed (and therefore unlawful) short-term rentals.

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