Property licence: How hosts can minimise legal risk that comes with running Airbnb units

Short-term car and home rentals are a great way that asset owners can earn incomes. However, they may also expose them to a lot of risks. Early this year, a young Kenyan woman was murdered by her lover at a rented Airbnb. It turns out that this man took several other young women on dates and rented Airbnb facilities where he would violently attack and rob them.

The story above is one of the many examples of the legal risks that homeowners are sometimes exposed to when renting out their facilities for short term stays.

Studies by two universities found that crime and violence increased in areas where there was an increase in short-term rental facilities.

From the study, the most common crimes committed were drunkenness, rowdiness, violence, and noise pollution. A separate group of researchers disputed the findings arguing that the research was flawed.

Nevertheless, short-term rentals, put to good use provide homeowners the opportunity to make additional revenue while also providing clients with access to affordable accommodation facilities. This model has, however, been used by criminals and other persons for bad purposes.

Other than the risk of crime and violence, homeowners also face the risk of losses from damage to property and theft. There is also a risk where the clients use the property contrary to public good and morality. For example, where the facility is used to host drug parties or for immoral purposes.

A quick look at the Airbnb website provides an internal risk reduction mechanism. There is the Aircover, which is an insurance provided to homeowners providing them with guest verification, reservation screening and host liability. Guests are also required to adhere to house rules and regulations provided by the site. From the site there is also mediation in the event of a dispute.

Homeowners can take additional measures to secure their homes by consulting with security experts. Perhaps the installation of security cameras and having private security within the premises, during the rental period.

Legal documentation can also help in minimising legal risk especially when guests commit actionable wrongs against the homeowner, for example breakages and destruction of property. Airbnb rental facilities are a type of property access models known as a licence.

A property licence is a document that allows the guest access and use of the property for a limited period, in exchange for payment of licence fees (accommodation rate). A property licence sets the terms and conditions of usage of the premises such that the homeowner who is the licensor can set strict terms of usage. Additional rules and regulations such as permitted usage and noise levels can be imported into the licence agreement which is binding on the guest.

The beauty of having your guests sign a licence is that in the event of any breach then the host can recover damages from the guests through the court system. The licence is a binding document and enforceable in Kenyan courts of law. A licence may not necessarily prevent guests from committing wrongs, but it provides a mechanism through which hosts can be remedied.

The licence should contain suitable recovery clauses and a suitable dispute resolution mechanism. The Small Claims Court can be resorted to in the event of damages less than Sh1 million. For other wrongs such as murders committed within the premises, the homeowner can recover under the licence agreement under breach of contract and general damages.