Airbnb 'Squatter' Nightmare: Does the Sharing Economy Need a Security Overhaul?

The case of an Airbnb guest who overstayed his welcome and now is a legal tenant raises critical questions about what the home-rental platform can do to protect its hosts.

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By Geoff Weiss

Opinions expressed by Entrepreneur contributors are their own.

While Airbnb has spun countless homeowners across the globe into veritable "micro-entrepreneurs" with seeming ease since its inception in 2008, the latest legal nightmare to beset one of the platform's 350,000 hosts illuminates a startling truth about the sharing economy: certain users will always want more than their fair share.

Perhaps there's no scarier exemplar than this: San Francisco resident Cory Tschogl, 39, claims a squatter has lawfully overtaken her Palm Springs condominium. That's because after refusing to depart (and pay for) the residence at the end of his Airbnb reservation, Tschogl's guest now has tenant rights under California law because he has been in the home for more than 30 days.

The eviction process could take months and cost her thousands of dollars, Tschogl told the San Francisco Chronicle, adding that assistance from Airbnb's customer service team came grudgingly -- until the story began to generate attention on social media.

Related: Airbnb Co-Founder: If Rejection Slows You Down, Entrepreneurship Isn't For You

Even Airbnb spokesperson Nick Papas admitted to Entrepreneur.com that its initial response to the matter "didn't meet the standards we set for ourselves."

However, while Airbnb insists that it is merely a platform to coordinate and transact rentals -- and in no way a property owner, broker or insurer, according to its terms of service -- the situation raises critical questions about what the peer-to-peer platform can and should be doing to safeguard its hosts.

Outside of Airbnb, such squatting instances are virtually nonexistent among professional rental management companies, says Ben Edwards, president of the Vacation Rental Managers Association (VRMA), a trade organization comprising roughly 500 property management businesses across the country.

Related: Airbnb Piloting Dinner Party Program for Complete Strangers

While licensed professionals are well-versed in local laws, time-sensitive leasing precautions and eviction procedures to safeguard against security threats like Tschogl's, an amateur Airbnb host operating unwittingly in a commercial capacity could easily be gamed by a professional squatter, he said.

For a rental period of longer than 30 days, for instance, a property management company would have almost certainly signed a lease agreement that would be subject to California law, Edwards said. While unconfirmed, it is unlikely that Tschogl used the professional forms and agreements commensurate with the California Bureau of Real Estate, he explained.

Additionally, according to the California Department of Consumer Affairs, in order to evict a tenant who won't leave voluntarily, a lawsuit must be filed in Superior Court. Tschogl's initial response, however, was to contact the guest directly and threaten to turn off the electricity in her unit.

This only escalated the situation, however, when her guest responded that he was "legally occupying" the condo and that his work depended upon power. "If the electricity gets cut off I will be losing money every day," he wrote, threatening a lawsuit of his own.

Related: The Sharing Economy is Misnamed But Deserves Celebration Anyway

Adding to Tschogl's misfortune is the fact that Airbnb's terms of service do not specifically warn users of this possibility. The company's much-touted $1,000,000 Host Guarantee, for instance, only covers "property damage," and its terms of service clearly state that "any bookings will be made at the guest's own risk." Given that tenant laws "vary greatly" from city to city, Airbnb broadly advises hosts to "review local laws before listing a space."

Now, Papas said, a policy change is in the works -- though he declined to provide specifics. "We're reviewing our procedures and making changes to our platform to give hosts more information about long-term reservations."

Ultimately, though, the conundrum pokes a glaring hole in the idealistic veneer of collaborative consumption, and illustrates that services like Airbnb, which want to engender a sense of security among users, are going to have to do more as the sharing economy grows.

"With the proliferation of the sharing economy, the fraud and tenancy issues that you're seeing today, in my opinion, will become increasingly more prevalent," Edwards said.

Related: The Future of the Sharing Economy Is a World Built Like Bitcoin

Geoff Weiss

Former Staff Writer

Geoff Weiss is a former staff writer at Entrepreneur.com.

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