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The Sharing Economy Part II: Couch-crashing Becomes A Business

In a previous blog, apps that allow drivers and riders to connect directly and share rides were discussed as a growing part of the so-called "sharing economy." The sharing economy focuses on peer-to-peer transactions, P2P for short. Rather than a company owning the assets, the company owns the technology that enables people to come together to share their own assets. Those assets include a home, a room in a home, or even just a couch. Sharing space has become extremely popular, and that is the subject of this blog.

Airbnb is the website that allows people to turn their extra room, or home while away, or their spare sofa into spare cash. People list the space they wish to share on the site, and people looking for space in that location contact the lister: a P2P transaction. The advantages of this type of accommodation are that there is almost always availability, even at the last minute; it is usually cheaper than the traditional forms of lodging; and you meet people who can actually introduce you to the local culture.

But is it safe? Users can look at online reviews and ratings by both parties to a transaction, and they can look up the people listing their space on Facebook and other social media outlets to check out their backgrounds. So far, there has not been any major safety concerns reported with Airbnb. Nonetheless, staying in someone's home while they are there rather than renting a room or the house while they are away may require extra careful consideration.

An issue which certainly requires careful scrutiny is legality. Airbnb listing can constitute subletting, and if someone's lease prohibits subletting, then sharing through Airbnb violates that lease. There have been numerous reports of people listing their space through Airbnb only to be served with eviction notices. Before deciding to make some extra money by renting your extra space, check your lease to make sure subletting is allowed. Another area bearing careful scrutiny is the applicable zoning and local ordinances. Some cities and towns prohibit transient hotels--rentals for less than 30 days at a time, e.g. If in violation of these laws, a renter can face up to five-figure fines. Airbnb has been criticized for not making renters more aware of the need to check these specific laws.

Equally important is the issue of liability: will homeowner's or renter's insurance cover any property damage or personal injury done by or to the people sharing the space? Airbnb has a $50,000 guarantee to cover deliberate damage to a renter's property, but does not cover accidental damage or personal injury liability. Therefore, anyone deciding to list their extra space for rent must check their homeowner's or renter's insurance policy regarding coverage limits for property damage and for personal injury of guests, making sure that the term "guest" includes short term renters.

If you are part of the growing sharing economy, and have questions regarding safety, legality, or liability, contact the Thomas Law Firm for a free consultation today.

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