If we have an agreement that I give you $5000 or you can punch me in the face, and I choose to take the punch in the face, that's not breaking the agreement. You didn't get "cheated" out of $5000. I chose an option that was specifically outlined in the agreement.
But if you really think it's OK, let's make that face-punching deal. Just don't be too surprised when I show up wearing spiked brass knuckles - you didn't say anything about that in the contract, so it's OK, right?
To use a sort of residential analogy, if you have a wild party and your carpets get stained from spilled drinks and dirty shoes, you can probably give them a good cleaning and they'll be almost like before, no noticeable wear unless you really look for it. Overall, the carpet would still be good for its expected lifetime of say 10 years. But, do that every weekend and the carpet will need to be replaced within a year.
Property rental agreements (and prices) have all kinds of assumptions in them. If the agreement is based on the idea of one tenant moving in, staying for a bit, maybe having family over during the holidays, and then moving out it would be structured a lot differently than a tenant who wants to be a junior landlord.
Every contract starts with the assumption that both parties are inclined to perform as stated. Viewing a contract as "putting a price tag on bad faith" is a very good way to get hit with treble damages in court.
I see. So you're not a real lawyer, you just pretend to be one on HN.
Second, I didn't bring up treble damages, the comment I was replying to did. I was simply drawing a logical conclusion based on the information they provided.
In either case the leases and the vetting process become that much worse for everyone else. Maybe the landlord starts doing random inspections to check for this. Basically everyone else's life gets a little worse. Tragedy of the commons, this is why we can't have nice things, etc etc.
You are ignoring the practical realities of landlord-tenant relationships.
Let's say you rent an apartment from me and I add a liquidated damages clause to the lease. It states that you will owe me $50,000 if you are found to be subletting your apartment using a service like AirBnB. Unless you have $50,000, the liquidated damages clause is effectively worthless and you can easily choose to break the lease ("my landlord can't get blood from a stone"). If I increase the liquidated damages to $100,000, the deterrent effect likely doesn't increase.
1. the rent gets paid on time
2. the property is kept in good condition
If those two things are satisfied, they have little incentive to go finding reasons about why their tenant who always pays the rent and keeps up the property should be kicked out. The other terms of the contract are just proxies for achieving those two outcomes. If the tenant delivers on both, they haven't "weaseled out" of anything.
Last time I checked, AirBnB was a publicly accessible website. It should be trivial for a landlord to see if their property is on there and enforce the penalties if it is. Another comment mentioned that landlords are inserting language into leases that they get the profits from AirBnB if it's used. That seems like a reasonable response to me.
A guy who's subletting his place on AirBnB in clear violation of his contract is an asshole. A douche bag. I'm calling our figurative guy names not because I need to vent out. I'm providing a social disincentive for such behaviour. The vaguely defined terms like "asshat" are actually part of the way society incentivizes one to behave in a particular way. Mostly, it incentivizes cooperation (as in Prisoner's Dilemma) and disincentivizes defection. In the West, such incentive structures are individually much weaker than economic ones - but still, when they are aggregated, they form a powerful force. Services like AirBnB and Uber unfortunately slowly erode social/cultural incentives, turning citizens into competitors instead of cooperators.
> Another comment mentioned that landlords are inserting language into leases that they get the profits from AirBnB if it's used. That seems like a reasonable response to me.
And this is the bad outcome. The end result is the same as before AirBnB subletting became a thing, but now the contracts have additional clause that will probably be phrased vaguely enough to destroy some use cases that would be beneficial for both parties. That's the bad result I'm talking about - the side that's being cheated won't just lie down and admit defeat, they'll take up arms and defend themselves. In the end things are worse for everyone involved.
> Wagging your finger and moralizing is only going to convince people who probably weren't going to do it anyway. If you want to change behavior, you have to change the incentives.
I am changing the incentives (in a very small way - armchair activism, I know). I'm trying to highlight the problems in hope that some readers who may not have noticed them before will notice them now and opt out of contract-breaking subletting, and will discourage others from doing so as well. It's working the foundations.
They erode the incentives that maintain the interests of the status quo, but they provide strong incentives to cooperate. They introduce competition to taxi services and hotels, but they increase cooperation between consumers and Uber drivers, and AirBnB hosts and guests.
Maybe AirBnB provides an incentive not to cooperate with the landlord in his desire to restrict how many guests you can have and how long they can stay, but it provides a strong incentive to cooperate with people who need a place to stay and can't afford a hotel.
I don't see any landlords ignoring economic incentives and offering below-market rent in the spirit of "cooperation". Indeed, they are quite happy to kick out rent controlled tenants at the earliest opportunity in order to bring in more money, regardless of how many people call them an asshole or a douchebag.
> And this is the bad outcome. The end result is the same as before AirBnB subletting became a thing, but now the contracts have additional clause that will probably be phrased vaguely enough to destroy some use cases that would be beneficial for both parties.
That's just pure speculation. Until we see the language we have no idea what cases it destroys or doesn't, or how vaguely worded it is. If there's a use that's beneficial to both parties, it should be possible to find a party who's willing to agree to it in order to receive that benefit, if the market is allowed to operate.
> I am changing the incentives (in a very small way - armchair activism, I know). I'm trying to highlight the problems in hope that some readers who may not have noticed them before will notice them now and opt out of contract-breaking subletting, and will discourage others from doing so as well. It's working the foundations.
If there is in fact a problem, it should be easy enough to point out the facts of the damage that's being done without resorting to calling people names like douchebag and asshole. Such insults usually come out when there isn't any logical argument to be made.
Yes, the point being that they give value to one group (their clients) while dumping externalities on everyone else. This is not something that society is supposed to tolerate; the company doing that should either stop dumping externalities or at least pay everyone else to compensate (taxes are one way of achieving that).
I'm not denying AirBnB/Uber are providing a valuable service to their customers. They do. They provide excellent and inexpensive service. At a cost for everyone else. Hence as I wrote in my original comment, it's burning trust to produce dollars.
> That's just pure speculation. Until we see the language we have no idea what cases it destroys or doesn't, or how vaguely worded it is. If there's a use that's beneficial to both parties, it should be possible to find a party who's willing to agree to it in order to receive that benefit, if the market is allowed to operate.
I didn't want to elaborate on that in order to keep the comment relatively short. But it's not "just a speculation", it's the obvious consequence of allowing the market to cooperate. If everyone bans AirBnB specifically in the contract, the existence of competition on the market implies that renters will soon have a problem with WaterMattressAndSupper. In order not to turn a contract into ever increasing blacklist, the point will have to be phrased vaguely.
> If there is in fact a problem, it should be easy enough to point out the facts of the damage that's being done without resorting to calling people names like douchebag and asshole. Such insults usually come out when there isn't any logical argument to be made.
There are arguments to be made, and there are being made. A lot of practical and economical ones. I was just trying to point out that insults like "asshole" don't mean "I have no arguments so I'll curse you instead". They're shorthands for "you're breaking an implicit social contract".
Having short term guests hurts the neighborhood? How? So every neighborhood with a hotel in it is automatically a dump?
Read through the rest of the comments thread then. There are plenty of examples, and there are even more if you scroll down to the bottom of this page and type AirBnB in the search box.
> At least if an AirBnB guest is a jerk, they'll be gone in a couple days.
And then a next one comes.
> Having short term guests hurts the neighborhood? How? So every neighborhood with a hotel in it is automatically a dump?
It does, because short-term guests have no incentive to care about the quality of life in that neighbourhood. Notice that you can't put a hotel anywhere - there are zoning restrictions exactly because short-term guests tend to create some problems, and many people decided they don't want such an establishment in their areas. AirBnB subletting is basically ignoring the will locals expressed about what they do and do not want in their neighbourhood.
> Tracy Smith lives two houses down from one of Martin’s rentals, a short walk to the popular Rainey Street restaurants and bars. She says she’d rather see kids in the backyard of Martin’s property than guys playing beer pong
Sorry, lady. You don't get to decide what happens in other people's backyards. I don't consider busybodies who want to enact housing discrimination based on age and marital status as having a valid concern we should support with legislation.
Another comment below complains about tourists being drunk and noisy and making groceries more expensive. I live in DC. Every year tourists descend on us like locusts. They clog up the public transportation, they don't know how to drive in traffic circles, and they're generally in the way and obnoxious. Still, that's part of the price you pay for living somewhere with lots of interesting things that people want to come see. There are plenty of boring, cheap places with no tourists or other short-term visitors.
> And then a next one comes.
Yes, and in an all probability, they won't be a jerk. Most people are normal, reasonable human beings.
> It does, because short-term guests have no incentive to care about the quality of life in that neighbourhood.
But the hotel has every incentive to care about the quality of life in the neighborhood. They also have far more resources compared to the average homeowner to influence the local government to e.g. increase police patrols or provide better street sweeping or whatever.
Zoning areas by use type has created its own enormous set of problems, from ever-increasing traffic, pollution from forcing people drive everywhere they need to go, increased water usage to support ornamental lawns, poor storm water management, tremendous infrastructure investments necessary to support low-density suburban areas where the property taxes can never repay the investment, and on, and on.
These are real externalities that are far more serious and damaging than "maybe a noisy person will be next door for a couple nights". So, people's decision that they don't want "such an establishment" in their area, ultimately creates its own set of costs that the rest of us have to bear.
The landlord rents out a property at an expected degree of risk. They make this determination by screening the renter and drafting an appropriate rental contract (or vice-versa).
If a renter plans to sublet out to 20 individuals every given month, risk skyrockets for everything from theft, pet damage, smoke damage, fire, etcetera. The landlord's home/rental insurance may not even cover these scenarios. Had the landlord known about this increased risk, they may have chosen to increase the deposit, amend the rental contract, or chosen another renter altogether.
3. The property is not used in a manner which creates unexpected costs for the landlord aside from the property maintenance issues addressed in #2, such as exposing the property owner to liability it is not prepared for.
(Note that lots of things that can be done with property create potential liability for the landlord and not just the tenant-in-possession.)
> The other terms of the contract are just proxies for achieving those two outcomes. If the tenant delivers on both, they haven't "weaseled out" of anything.
No, in addition to other concerns (like my #3) that you may have forgotten, if the tenant usurps the landlords prerogative of deciding what steps to take to protect the interests the landlord has in the property, the tenant is weaseling out of something. If the tenant wants broader discretion to decide how to achieve the landlords interests without weaseling out of their agreement, they can negotiate that discretion into the lease and pay the landlord whatever premium the landlord demands for that transfer of trust.
If there are actual costs in the form of damage that actually does occur (violating #2), then the landlord has ample grounds to pursue the tenant to recover those costs. People don't get compensated for things that might have happened.
Liability to the government or an injured third-party for events occurring on the property for which liability exists for the landlord and not exclusively the tenant-in-possession; this can exist with no damage to the property.
Further, again, given that the landlord would no doubt charge more for giving the tenant greater discretion to choose what risks to take on behalf of the landlord (even when considering damage to the property alone), breach of contract to take greater risk than is allowed in the contract is a harm to the landlord, because it denies the landlord the opportunity to choose to rent to a different party who would pay for the privilege that the usurping tenant is taking without paying for it. This is a harm that actually happens, not a thing that might have happened.
I don't see how it's the tenant's duty to inform the landlord about the most profitable way to rent out their property. If the landlord wants the opportunity to rent to a different party for a higher amount with more risk, they should go find a different party and make that offer.
Ultimately it's up to the landlord to enforce the terms of the lease. If they aren't going to do it, then they're going to get taken advantage of. If a tenant stops paying rent and you don't evict them, don't complain about not getting your rent. You have a legal remedy available to fix the situation.
If you don't want your property on AirBnB, check AirBnB and make sure it's not there. If landlords started doing that and breaking these leases within the first month or two, this would quickly become unprofitable. They have all the power in this situation.
If the terms of the contract don't sufficiently compensate you when a tenant breaks the lease, change them so that they do. I'm sure plenty of landlords have a story about how they got burned by a poorly worded lease. The smart ones learn from their mistakes and move on.
edit: thank you for explaining banks to me; I'm talking about stealing my parent-comments' money for a year without them noticing, and investing it.
The money in your bank account isn't really there. Technically some of it is there but how much depends on your government's regulation -- it will probably be somewhere around 15%. The rest is just a number in their database and the actual money is given to their financial department to play the market.
They provide you banking services and give you a terrible interest rate, they pocket the difference, you have near zero risk since you're insured, and both parties are happy.
Obviously in your example the thief runs the risk that their victim will notice at which point the thief will be subject to all the attendant penalties. I'm not saying there shouldn't be penalties. The penalties have to be severe enough that they are not worth the risk of being noticed. If they aren't, some people are rationally going to decide to take the risk.
But you have to look at the perverse incentives such attitude creates. If it's ok to break contracts as long as the victim doesn't notice, it pushes one side to be very shady, and the other to be hypervigilant. Also, people make mistakes and most of the time the victim notices quite soon. That's why we invented values of "honesty" and "integrity", which include not breaking deals even if the other party doesn't notice. Upholding them reduces the amount of resources we need to spend on protecting ourselves from one another.
This is exactly why it's a poor gamble to make in most circumstances.
I'm not offering prescriptive advice. I'm not advocating that someone should steal or break contracts. I'm merely describing reality. If the reward outweighs the risk for someone, they'll come along and do it. That's a simple fact. Pretending it doesn't exist and we should all just be nice is only going to cause people to lose money. Either decrease the reward or increase the risk until that isn't the case.
People put locks on their doors and keep their money in banks instead of in a big pile on their front lawn. Why? Don't criminals know it's wrong to take things that don't belong to them, even it it's sitting right there in plain sight for the taking? Why don't we just depend on the values of honesty and integrity? Wouldn't that be so easy and great?
Locks are pretty easily defeated, but they provide enough of a hassle and increase the probability of detection enough that it's not worthwhile for most people to bother. If all your valuables are sitting on the lawn, some people who would never kick down your door might run up and grab them. Why? Are they "assholes" and "douchebags"? Maybe. But the incentives and penalties also shifted so there's less risk, increasing the probability that someone will find it worthwhile to take the chance.
Someone who would never rob a bank might steal a sandwich if they were starving. Did they suddenly give up on the implicit social contract? No, the possibility of dying of starvation just became a larger risk to them than whatever penalty might exist for sandwich thievery.
In practice, I think the AirBnB subletters are just exploiting a temporary knowledge gap between the landlords and the AirBnB guests. With enough articles like this one, landlords will wise up and close the gap, either listing their properties on AirBnB themselves, or checking occasionally that their properties aren't listed there and shutting down the lease if they are. The subletters obviously have no leg to stand on, legally. Once they have a few evictions for breach of contract on their record, they won't be able to get a lease anywhere anymore. More's the pity for them, but that's the risk they took.
>and someone will somewhen, way before the heat death of the universe
Probably. But then again, by definition we have no knowledge of crimes that nobody notices. There could be an untold number of crimes that have gone unnoticed.
Rental agreements have already ballooned into legal tomes no first-time lessee could ever understand. If they now have to spell out penalty for a variety of different breaches, they will become much worse (why not a single, higher penalty? That will get abused to extort tenants who commit minor violations...)
IMO it should not be about contracts. You should enter agreements in good faith and there should be social consequences for doing otherwise (reputation ruined, ... etc.). Be excellent to each other.
Exactly this! The consequence of letting people abuse trust on massive scale is more complicated contracts, which is a worse outcome than if everyone just agreed to act in good faith.
If social consequences were sufficient, we wouldn't have invented this whole legal system in the first place.
Social consequences are not good for everything, but there are a lot of areas when there are better than economic approach. The problem is that economic incentives are much stronger than social, so the latter can be easily destroyed by the former. The classic example would be the fact that you absolutely, positively don't want to pay people for donating blood - it immediately leads to contamination of blood banks, as people replace the sense of duty with an opportunity for free cash, and thus stop caring about things like not donating blood when they are sick.
Since social incentives are fragile, you want to defend them in the areas they work better than economic ones - hence the opposition to AirBnB.
There is a difference between an agreement that grants a choice, and an agreement which includes specified obligations and a specified predefined payments due for particular breaches. They are not equivalent, and the breaching the obligation in favor of accepting the preset consequences in the latter case is still breaking the agreement.
And, anyway, the security deposit discussed upthread is neither a predefined payment for breach nor an option in lieu of performing some other obligation in most rental contracts, its a deposit in advance against potential liability for damages owed by the tenant to the landlord; so your response seems to be a non-sequitur on several levels.
There's always a choice. People aren't automatons. We can't pull strings and make them do what we want. All we can do is offer incentives and penalties. If those aren't aligned in such a way to produce the behaviors we want, then they need to be adjusted. Don't get mad at people for responding in a logical way to the incentives that exist. Fix the incentives or deal with it.
I'm curious how you think people adhere to contracts then. Mind control? Magic? How else could they possibly do it except that they choose to?
Do they happily turn themselves in, or are they relying on a yet to be established, landlord sponsored snitch industry providing state of the art tenant surveillance services to smoothen the transaction?
If at any time the penalties are less than the cost of adhering to the terms of the contract, it's only rational to break the contract and pay the penalty.
Let's say you had an employment contract where you get paid $100k/year, but if you leave before 5 years, you have to pay a $50k penalty. 3 years in, you get a job offer for $500k/year. Are you going to stick to the contract because you need to obey "the rules", or are you going to pay $50k and take the much higher paying job?
The rules that are broken here aren't in the contract, they're about the contract. So if it's rational (in economical sense) for me to break a contract, then I should break it[0] and then pay the penalty. The problem with people subletting on AirBnB is that they don't show up at their landlord's doors immediately after the guest leaves, ready to pay the price. They just keep cheating the other side until they get caught.
In your employment example, it would be as if I worked remotely at the first job, then joined the second company and didn't tell my former employer - just logged hours for doing nothing, hoping he doesn't notice (maybe it's a big company).
[0] - that how it may work in Serious Business, but contracts between regular people are usually entered with an assumption that both sides want to follow them through; to break them on purpose based on cost-benefit calculation means one is an asshole.
What does that have to do with this? Someone who rents a property with the intent of subletting through Airbnb is not paying a penalty to break the contract so that they can enter a new one with different terms. They are still bound by the original contract. I'm not talking about the details of the terms, simply pointing out that your analogy of leaving one job for another does not apply.
Or look at it this way: everyone on this site knows that the basic problem with programming is that machines execute what you wrote to the letter, and do not know about what you meant. That leads to bugs, because our descriptions rarely capture our intentions precisely enough. But we, as humans, most of the time know the intention of the instructions we're receiving. Every time we force something to be evaluated formally instead of socially, we're robbing ourselves of the increased efficiency our minds give us. It's a trade-off, and it's often worth it - but it should be done only when we gain something from it.
In the AirBnB subletting situation we gain nothing - contracts gets more complicated to cover new abuse vector, and end result is the same except we've just lost flexibility and efficiency by codifying another part of our interactions.
The tenant has a stronger incentive than usual to maintain the apartment as impeccably as possible, pay rent promptly in full, and screen AirBnB guests to minimize risks, since the lease can be cancelled with little warning if they're discovered.
There's clearly a demand in the market for AirBnB. The landlord could easily cut out the middleman and list the property there themselves if they wanted to. If they want to write lease to cut themselves a portion of the profits while letting the tenant do all the work of managing the AirBnB guests, there are probably people who would take them up on that offer as well.
Yes, contracts might get some extra words, but they're not written in stone. We can read the words and negotiate to change them to our liking for the mutual benefit of both parties.
Actually, contract law spells out the penalties for what happens when one party doesn't adhere to the terms; a contract may opt to do so for certain cases, but doing so doesn't make it a "good contract", there are costs and benefits to doing so, and whether it makes sense to do so depends on the context of the contract, the types of violations being addressed, whether the parties envision continuing the relationship after the violations addressed, and other factors.