SAN FRANCISCO—CBS News just reported that a “guest” in a San Francisco apartment, who was placed there by Air BnB has refused to leave the apartment and, it may take the tenant months and probably thousands of dollars to evict the squatter. Meanwhile the New York courts have determined that a landlord cannot use a law enacted last year to prevent apartments from being turned into hotel rooms, thereby enabling the existing tenant to utilize  the services of Air BnB to make a profit on the apartment they rent. In New York there is also talk among members of the City Council about enacting legislation to help renters defray the high living cost by taking in paying “guests.” However, little is being considered of the unintended consequences to both landlords and other residents in a building from tenants using services such as Air BnB.

First, there is the overriding security risk posed to both the tenant-host and the other residents from a stranger showing up with a suitcase and moving into a building for a night, a week or even longer. However, this risk also extends to the landlord if this “guest” turns out to be a criminal who robs the host or any of the other residents or causes bodily harm to any of the residents. In that event, the building tenants can and in many cases will sue the landlord, claiming that the ownership failed to maintain a safe living environment. The issue that is lost in attempts to protect a tenant's right to profit on their rented apartment is that the “guest” is in fact a transient with little concern for the quiet enjoyment of the other residents of the building or maintaining the quality of life or the appearance of the host's home or the building.  How then can the landlord and the other tenants protect themselves from the stranger in their midst?

Additionally, as the San Francisco tenant learned to her great dismay: Once the “guest” arrives, there is no way to quickly get them to leave. However, the other thing that tenants should, but do not, consider, is that they will have to pay tax on the rent money they earn; will be responsible to repair any damage to the apartment and perhaps, to the building caused by their “guest”; will have to obtain additional insurance in case the paying “guest” is injured in the home and not covered by the typical inexpensive renters' insurance policy. Also, if the apartment is in a cooperative or a condominium, New York City will be able to charge the commercial transfer tax rather than the lower residential transfer tax when the host sells the apartment. As a result, the cost of housing the “guest” can exceed the revenue from the “guest.”

Unfortunately, as indicated above, the landlord can be blamed if anything goes wrong in the building and any of the other tenants suffer. Moreover, even though the tenant's actions, in bringing the “guest” into the building may be in violation of the lease, the landlord will not be able to terminate the tenant's lease because courts tend to favor the rights of the tenants over the landlord. One way to deal with this problem is to eliminate the incentive. Perhaps the solution is for every lease to provide that, if the tenant has a paying “guest” in the apartment, the tenant is required to give the proceeds to the landlord.  It may be nearly impossible to evict a tenant who breaks the rules, but suing them to recover the funds they received from the “guest” may be the most efficient way of dealing with the problem.

Stuart Saft is a partner at Holland & Knight based in New York City. The views expressed in this column are the author's own.