A San Franciso couple, Darren and Valerie Lee will pay $2.25 million to San Franciso, CA, after they were caught renting their apartment units on Airbnb. The landlords agreed to pay the fine and are not allowed to offer short-term rentals on the 17 San Franciso buildings they own for 7 years, reports SFGate. Valerie Lee said in an email that they were martyrs for the vacation rental community. However, she said that the settlement, “helped us understand the city’s need for affordable housing at a much more in depth level.”
San Francisco enacted strict renting laws after Airbnb turned the already hostile San Francisco housing situation more dire. San Francisco is facing a housing crisis leading many to be evicted so that the landlords could make more money using their lots as vacation rentals.
This wasn’t the first run-in the Lee’s had with the housing authorities. After the couple bought an apartment in 2004, they quickly removed the longtime residents including a disabled person, which violated California’s Ellis Act, reports the Washington Post. The Ellis act legally lets the landlord kick out the residents if they plan on taking the property off the rental business. However, the Lee’s reentered the apartment into the rental business to attract vacationers, violating the Ellis Act. The Lee’s ended up settling that case in 2014 for $276,000 and an injunction against their apartments from entering the rental business.
City Attorney Dennis Herrara said that the Lee’s ignored that injunction and continued to list their apartments as vacation rentals. In the 11 months after the injunction, the Lee’s accrued $900000 in vacation rentals.
Investigators saw their apartments popping up on Airbnb. So they asked the Lee’s about it, but Valerie Lee denied it. She told the investigators that her apartments were leased out to long-term tenants. Furthermore, she produced fake leases and enlisted friends and family to pretend they were tenants. Valerie even invited the investigators to inspect their homes.
The Lee’s went out of their way to deceive investigators with “far-reaching devious” steps, said the city. But the Lee’s were not smart about their deception. They staged all their apartments in a similar manner.
City inspector Adrian Putra found that everything from the clothes to the dishes was the same. “Each of the eight properties we inspected had been staged to appear as if a tenant lived there, but it was obvious to me that it was a ruse, as every apartment’s staging was identical,” Putra said. “Every apartment had the same dishes.”
“The had the same Costco food items scattered about, the same arrangement of dirty breakfast dishes in every kitchen sink, same personal products in each bathroom, same damp towels artfully draped over doors as though someone had recently showered, the same collection of shoes and clothes, and the same houseplants in each apartment,” the city said.
The Lees and the city came to an agreement of a fine of $2.25 million for penalties and investigation costs. Their real estate holdings have been put up as collateral to make sure they pay the fine.
Dennis Herrera said, “The serious financial penalty is an important deterrent. 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.”
Airbnb released a statement saying, “These are not the type of hosts we want on our platform and are glad the city has the tools it needs to enforce the rules.”