Record $2.25 million settlement reached for violation of San Francisco short-term rent law

By John Breslin | Nov 30, 2018

SAN FRANCISCO — A San Francisco couple accused of violating the city's short-term rental law has agreed to pay $2.25 million to settle a lawsuit taken against them by the city.

The size of the settlement should be a deterrent against others thinking of breaking the law, created to ease the city's crippling housing crisis, said Tom Elke, a lawyer with expertise in housing issues.

"It definitely should a deterrent," Elke, of the Elke & Merchant law firm, said. "This is the largest. It is not the first, but the law is only a few years old."

The couple, described as running an "illicit hotel chain" by city authorities, continued to advertise the units on AirBnb and allegedly rented them out even after being told to stop in 2015. They earned $700,000 from the rentals.

A city attorney's investigation into the couple first began in 2014 following a lawsuit alleging they evicted tenants, then turned the units into short-term rentals. They were ordered to stop, but reportedly did not do so.

The city then moved to enforce the injunction, which led to the recent settlement agreement, under which they are also barred from short-term rentals for other units they own.

“The serious financial penalty is an important deterrent,”  city attorney Dennis Herrera said in a statement to the San Francisco Chronicle. “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.”

In a statement to the same newspaper, office of short-term rentals director Kevin Guy described the landlords in a statement as “some of the most egregious, repeat violators of the City’s short-term rental laws.”

Under the law, property owners must register with their city unit if they plan to rent their unit for less than 30 days. They must live in the unit and cannot rent more than one.

Elke said the law was a "good start," but "in many ways does not go far enough" to tackle what is arguably the city's most pressing issue.

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