Is There a Pro-Home-Sharing Trend in California?

December 13, 2019
By Christina Sandefur

Yet another California city is being sued for stepping on an essential property right—a homeowner’s right to share their home with overnight guests. But recent court decisions may indicate that the tide is turning in favor of the protection of home-sharing in the Golden State.

The city of Santa Barbara told James Fenkner that he can’t offer his home as a short-term rental unless he converts it into a hotel. But Fenkner wants his home to remain residential so he can live there full-time after his kids are grown. That’s not unusual; as the cost of living increases, it’s become common for Californians to use rental income to keep their homes for later use by themselves or their children. Unfortunately, California’s local governments are increasingly hostile to the right of property owners to make such decisions. The good news is that California law limits the ability of coastal cities such as Santa Barbara to block homeowners from renting out their homes.

That’s because the California Coastal Act requires local governments to get approval from the state’s Coastal Commission before changing how land is used along California’s 800 miles of coastline. And, fortunately for Golden State residents, the Commission recognizes that home-sharing plays a valuable role in providing affordable access to the coast. It allows travelers an alternative to pricey hotels, while reducing the need for new development and public facilities. And, of course, it enables residents of coastal cities to make extra money to pay their bills and maintain their property. While the Coastal Commission has allowed cities to limit the number of vacation rentals when necessary, it has also implored cities to adopt only “reasonable and balanced regulations that can be tailored to address the specific issues” of the community, rather than overregulating or banning the practice outright. And courts have ruled that cities that try to ignore the Commission’s authority and prohibit home-sharing are in violation of state law.

That’s what happened in the case of William and Susan Hobbs. After Susan’s mother passed away, the couple put considerable resources into fixing her Pacific Grove home to be a short-term rental so that they could afford to keep it in the family until they eventually move into it. They, along with Donald and Irma Shirkey (who purchased a home in Pacific Grove so their children and grandchildren could carry on the family tradition of visiting the coastal town), sued Pacific Grove last year when the city suddenly and arbitrarily deprived them of their right to offer their homes to overnight guests. This summer, the Monterey County Superior Court ruled in their favor and told Pacific Grove that its actions violated the Coastal Act.

In a similar case in March, a Ventura County Superior Court ruled that Santa Barbara’s short-term rental ban was illegal, since, like Pacific Grove, the city didn’t get the necessary Coastal Commission approval. Yet the City didn’t learn its lesson. It refused to back down from its position that Fenkner could no longer rent his home, so he also sued the city. But Santa Barbara still didn’t back down; instead it tried to dismiss Fenkner’s case. But earlier this week, a trial judge denied the city’s motion, meaning Fenkner will have his day in court to defend his rights.

These recent court decisions are sending an important message to California’s coastal cities: Commission approval is required before depriving homeowners of the right to allow visitors in their homes. If cities continue to ignore state law and needlessly trample on property rights, we can expect to see more lawsuits to come.

But there’s a better way. Instead of banning or overregulating home-sharing, cities ought to address problems that may arise by enforcing the anti-nuisance rules they already have on the books. By doing this, they can protect neighbors from problem properties while still embracing economic opportunity for local residents and businesses.

Christina Sandefur is the Executive Vice President at the Goldwater Institute.