January 8, 2018

West Coast Real Estate Update: Jan. 8, 2018

Holland & Knight Update
Susan Jennifer Booth | Stacie Andra Goeddel | Robert M. Haight Jr. | Karl J. Lott | Douglas A. Praw | Andrew J. Starrels | Chris Gregores

Apartment Owner Loses Court Battle with Airbnb

A federal judge in Los Angeles recently dismissed a lawsuit by the owner of the 4,255-unit Park La Brea apartment complex against Airbnb Inc. that sought to hold the online short-term rental company liable for breaches of apartment leases and costs to deal with unruly Airbnb guests.

Apartment Investment and Management Company (Aimco) alleged in its complaint that Airbnb allowed Park La Brea residents to rent out their units on Airbnb's website when it knew those rentals violated the residents' lease agreements. Aimco also claimed it incurred costs to increase security, make repairs and deal with upset neighbors after Airbnb guests sometimes threw raucous parties.

Airbnb responded by saying Aimco's dispute should be with the residents who rented out their units and that it does not mediate disputes between Airbnb hosts and landlords. Airbnb added that its terms of service advise hosts to be aware of local laws applicable to the use of their units and require hosts to warrant that their listing will not violate the terms of any agreements they have with third parties.

Ultimately, the court held that the immunity provision of the Communication Decency Act (CDA) pertaining to providers of online communications services shielded Airbnb from liability. The court reasoned that the Airbnb hosts — not Airbnb — were responsible for providing the listing information for the rentals that violated Aimco's lease agreements. Since Airbnb merely provided a framework for hosts to post proper or improper advertisements, the CDA prevented any liability from being placed on Airbnb, and the lawsuit was dismissed.

Developer Cries Foul Over Eminent Domain Near Inglewood's Los Angeles Sports and Entertainment District

Los Angeles County plans to seize by eminent domain 4 acres of vacant land fewer than 4 miles from the $2.6 billion, 300-acre Los Angeles Sports and Entertainment District being built by Los Angeles Rams owner Stan Kroenke. The property is currently owned by Sassony Commercial Real Estate Development, which entitled the property for a 200,000-square-foot project called the Vermont Entertainment Village, which would include a grocery store, pharmacy, restaurants, a banquet hall and retail space surrounding an open plaza. The county's plan is to pay $15.7 million for the property and turn it into a county-owned, multi-use development that includes affordable housing, retail, a vocational school, a public charter boarding school and a parking structure.

Sassony views the county's action as a backroom deal that ignores the needs and desires of the community in an effort to snatch up land that will increase in value once Kroenke's development is complete. South Los Angeles residents submitted almost 800 signatures in support of Sassony's Vermont Entertainment Village when the Los Angeles County Board of Supervisors met in early December 2017. U.S. Rep. Maxine Waters sent a letter to the county on Dec. 4, 2017, that expressed strong objections to its plan to acquire the property. Sassony says it will fight the eminent domain proceeding in court if necessary.

Los Angeles Leads Nation in Housing Stock Valuation

Three California cities made the top 10 in a list of cities with the most valuable housing stock compiled by Zillow. Los Angeles' housing stock led all cities in the U.S. with a total value of $2.7 trillion. San Jose and San Diego were sixth and ninth on the list, respectively, with valuations of $726.6 billion and $632.7 billion. Among the top 10 housing markets, San Jose experienced the largest growth in the value of its housing stock from the previous year, with a 13.5 percent increase from 2016.

The report did not segregate the value of a city's single-family homes from its multi-family homes, but did include information on the amount of rent paid by city dwellers. Nationally, renters spent a record $485.6 billion in 2017, with renters in New York and Los Angeles spending more than renters in any other city. Renters in San Francisco collectively paid $616 million more in rent than renters in Chicago, despite there being 467,000 fewer renters in San Francisco than Chicago.   

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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