Tenant Running Airbnb Without Permission: Landlord’s Options

If you caught your tenant subleasing on Airbnb and are not sure what to do, here are two possible ways to handle this.

  • Deliver a lease violation notice and potentially evict the tenant.
  • Renegotiate the terms of the lease.

First Option: Deliver a Lease Violation Notice and Evict if the Tenant Doesn’t Comply

The first option is to mail or deliver your tenants a Lease Violation Notice and if they don’t comply, proceed with eviction. 

There are many reasons why this may be a better solution than allowing the tenant to continue to sublet, but here are the most important things to consider:

Insurance and Liability

The rental property owner is responsible for guests’ safety at all times. Accidents happen and if injured, guests will sue the rental owner and not the tenant who is subletting the property. If you don’t believe me just head over to the Airbnb community board or to any of the Facebook groups dedicated to vacation rentals and hosting. You will find plenty of horror stories.

Airbnb offers something like gap insurance where they will cover anything that the Homeowner’s Insurance doesn’t cover.

The problem is that the typical landlord insurance will not cover short-term rentals at all. The rental owner has to get insurance coverage designed for Airbnb and VRBO.

Unauthorized Occupants Who Aren’t Screened

Would your tenant care enough about the safety and security of your property and the neighbors to take the proper precautions against unauthorized occupants and parties?

You have to know who is staying in your rental. You can’t delegate this responsibility to your tenants because they have everything to gain and nothing to lose except their deposit.

Long-term Guest Who Become Tenants

Allowing your tenant to become your de-facto property manager is not a good idea because they don’t know the laws. What happens if they permit guests to stay too long. You may have to evict them. Many US states have a 30-day rule after which a guest becomes a tenant even without a written lease. 

Below is a video of an extreme example of this. 

HOA Violations

Most Homeowners Associations have rules against short-term rentals and some have stiff fines for violations, some as high as  $100 per day. It’s not advisable to try to hide short-term rentals because eventually a neighbor will notice and report it. Maybe this is how you find out that your tenant is running an Airbnb.

Running an Airbnb is a Blatant Lease Violation

If you have a “no subletting and running a business” clause in your lease, you have to enforce it.  If you don’t, tenants will break more rules and they will expect to get away with it.

Each state has different rules on how long you have to wait before your start eviction. Check the Landlord-Tenant Laws here. 

It’s always best to reach a mutually agreeable solution instead of filing for eviction. 

Letting go of a tenant who is paying on time and is maintaining the property in perfect condition is hard but necessary. Find out why the tenant needs to run an Airbnb, maybe they are short on cash, and a different solution like a roommate that you can screen may be a better solution for them and for you.

If you have to evict, get enough evidence that the tenant is running Airbnb. Evictions for lease violations typically last longer and are require concrete evidence.

Second Option: Renegotiate the Rent and Sign a New Lease

If you decide to renegotiate the lease terms with the tenant, make sure to take certain precautions before signing the new lease.

Talk to your insurance agent about an updated policy and costs associated, as those would need to be passed along. 

Ask them about subleasing as an STR and if your tenant could also get a lease and how much that would be. 

There are insurance companies like Proper that provide insurance specifically for short-term rentals.

Check with an Attorney about Liability Gaps

Talk to an Attorney about potential liability gaps, how to handle and what would have to be updated in a new lease, if you were going to consider it.

Consider all additional costs to you for liability gaps that need to be filled, wear and tear, and anything else you can think of.

Raise the rent to cover wear and tear, vacancies, additional liability, etc. if you’re going to extend and discuss an additional cost for past wear and tear due now.

Create a new lease that works for both of you.

Make Sure You Can Run a Legal Short-Term Rental

Below are some considerations and questions you need to answer before making an educated decision.

  • Check with your HOA if they would allow STR. Most deed-restricted communities have rules that prohibit short-term rentals. 
  • Do you need a business license to operate your Airbnb? Some local jurisdictions may require a business license for short term rentals
  • Check zoning and building standards.
  • Do you need a special permit and inspections to rent your property as STR
  • What kind of taxes would you have to pay. Airbnb now collects these taxes for most locations but it doesn’t hurt to verify.

Many landlords are switching to STR and are happy with it, however, the question is should you let your tenant do the management for you. It sounds like a win-win situation and for certain people and properties, it may be.

Personally, I think the rental property should be a profit center for the landlord and not the tenant.

On that note, if you are tempted by the higher rent for short-term rentals, consider managing it yourself but maybe renting to traveling nurses and other professionals where you have the best of both worlds: higher rent and almost no vacancies. 

Our directory lists a couple of websites where you can list your property and find traveling nurses as tenants.

About the author

Jana Christo is a business owner, real estate investor, and property manager. She has 16 years of experience in most areas of real estate.
During the last recession, she was also the managing partner for a company that bought and rehabbed properties from the court foreclosure auctions. Today, she manages her own portfolio of rental properties and shares her experience on Rentce.com.