Airbnb Landlords Get $2.25M Fine For Illegal San Fran Rentals

San Francisco City Attorney Dennis Herrera announced that two local Airbnb landlords will pay $2.25 million in penalties and investigation costs for running an illegal hotel chain during the city’s housing crisis.

The defendants, Darren and Valerie Lee, offered up apartments on Airbnb rather than lawfully renting the units to residential tenants. After being caught in 2014, the duo continued to break the law and unlawfully rented 14 other apartments on the home rental site until being caught after a long investigation ended in May.

As part of the settlement, the Lees are banned from renting out any units as short-term rentals in the 17 San Francisco buildings they own or manage, maintaining the more than 45 units for use by long-term tenants. That restriction is in place until at least May 2025. In addition, the settlement requires the couple to pledge their real estate as collateral to ensure compliance.

“This is a win for San Francisco residents,” Herrera said in a press release. “Whether you’re a tenant or a landlord who has been following the law, this is a victory. This outcome frees up more homes for long-term tenants and stops unfair competition in the marketplace. The serious financial penalty is an important deterrent. It sends a clear message to those looking to illegally profit off of San Francisco’s housing crisis: Don’t try it. We will catch you. Most importantly, we preserved more than 45 housing units to be used as homes, not hotel rooms. We are fighting back against San Francisco’s housing crisis in every way possible.”

“The Lees are some of the most egregious, repeat violators of the City’s short-term rental laws,” Office of Short-Term Rentals director Kevin Guy added. “They have taken units off of the market that should be reserved for long-term San Francisco residents. It is extremely gratifying to see them being brought to account for their actions.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.