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Keeping Home-Sharing Entrepreneurs in Business

Seattle Vacation Home v. City of Seattle

Case Status

Date Filed

June 27, 2018

Last Step

Case settled.

Next Step

Case Overview

One might expect Seattle—home to Amazon, Microsoft, and Expedia—to embrace HomeAway, Airbnb, and other home-sharing services, but the city’s well-earned reputation as a haven for innovation does not extend to private property rights. For over a decade, home-sharing was commonplace in Seattle and thrived under a reasonable regulatory system that included paying short-term rental taxes to the city. Entrepreneurs—like the plaintiff in this case—built successful businesses based on carefully acquiring and professionally managing short-term rental properties around the city.

Indeed, home-sharing has played an important role in smoothing the city’s growth over the past decade. In addition to accommodating tourists who come to Seattle to experience its natural beauty and vibrant lifestyle, short-term rentals help facilitate the city’s influx of new workers at Amazon, Microsoft, and other large local employers. People who are moving to Seattle—or working there for a few months at a time—need a place to stay, and short-term rentals provide an obvious solution.

Home-sharing has never really been a problem in Seattle. Reported complaints are low—about on par with long-term rentals. And, as discussed above, short-term rentals have come to serve an important function in helping the city deal with its recent growing pains. But despite all of this, the city voted late last year to restrict short-term rentals.


The Law

Seattle’s law operates very differently from the one in Miami Beach. The city has not outlawed home-sharing. Instead, it has imposed a set of restrictions that make it difficult for someone to operate a home-sharing business, harming local entrepreneurs who have been operating in the city for years without incident.

The Seattle law was passed in late 2017 and goes into effect in January 2019. Under the new regulations, someone can only rent out their primary residence plus two additional properties. If an individual, or business, owns more than three properties, they will be prohibited from using them for short-term rentals. These restrictions apply everywhere in the city, except for the Downtown Core and First Hill neighborhoods.

These new rules are unconstitutional under the Washington Constitution. In Washington, a court evaluates a land-use restriction by looking at whether the regulation is aimed at achieving a legitimate public purpose; whether it uses means that are reasonably necessary to achieve that purpose; and whether the regulation is unduly oppressive on the landowner.

When it adopted the new home-sharing restrictions, Seattle’s stated goal was to increase the available supply of affordable housing in the city. While addressing a housing crisis may be a legitimate governmental interest, the new law fails under the second and third parts of the Washington test. Despite being asked to explain the need for the restrictions, Seattle introduced no evidence showing a link between short-term rentals and affordable housing. Furthermore, even if there were a link between short-term rentals and housing affordability—and there is not—the burden the law places on Seattle’s community of home-sharing entrepreneurs is grossly disproportionate to any minor public benefit that may be achieved. Indeed, the law threatens to put many home-sharing entrepreneurs out of business entirely.

Case Logistics

That is why local entrepreneur Andy Morris and his company, Seattle Vacation Home, are challenging the new restrictions in Washington State court. They are not seeking any money from the city, nor asking for any special privileges. Instead, they merely seek the right to continue operating the business they have built.

Andy owns Seattle Vacation Home, LLC, a local business that operates 11 properties around the city and rents nine of them as short-term rentals through online platforms. These properties routinely receive high marks from renters, and Seattle Vacation Home take the utmost care to keep them in excellent condition. The company also works hard to keep problems at its properties to a minimum. Over the course of more than 2,500 bookings, the properties have received only 10 noise complaints, which Andy promptly dealt with, and the police have been called only once—by Andy himself when an unauthorized party got out of hand. In addition to providing a livelihood to Andy and his wife, Seattle Vacation Home provides a livelihood for the family that runs Clean Team, LLC, which cleans and maintains Andy’s properties.

If the new law is allowed to stand, it threatens to put Andy, his wife, and everyone who cleans and works on their properties out of business.

The case was filed in the King County Superior Court of Washington on June 27, 2018.

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