Saying the city’s new regulations on online home-sharing
services subject Chicago homeowners to a “literally incomprehensible” and “dizzying”
array of rules - with severe potential penalties for breaking those rules –
a group claiming to represent a number of Chicago property owners who list
their properties on Airbnb and similar home-sharing sites has sued Chicago City
Hall, calling on a federal judge to declare the city’s new ordinance
On Nov. 4, an organization calling itself Keep Chicago
Livable and named plaintiff Benjamin Wolf filed suit in Chicago federal court,
asking the court to strike down Chicago’s Shared Housing Ordinance.
“The Shared Housing Ordinance, which purports to attempt to
regulate the phenomenon of home sharing on internet sites such as Airbnb,
HomeAway, FlipKey and VRBO, in fact operates as a de facto and in some cases
outright ban on the use of internet home sharing services, and violates the
constitutional rights of Chicagoans to speak and communicate freely and
anonymously on the internet, to use their own property, to have privacy, and to
not be subject to arbitrary and discriminatory enforcement of the laws,” the
The ordinance, which was approved earlier this summer by the
Chicago City Council, is scheduled to take effect next month.
Supporters said the ordinance was needed to strengthen the
ability of the city to police short-term rentals of condos, apartments and
homes in the city’s neighborhoods and high rises. Supporters said the
regulations arise in response to complaints from neighbors of the rented
properties who said the short-term tenants disrupted their neighborhoods or
their buildings, and threatened public safety.
Complaints also arose from the hotel and motel industry,
which said the home-sharing platforms, like Airbnb, enabled building owners to
essentially run small hotel operations using otherwise vacant homes and apartments,
sidestepping city hotel regulations.
However, the Keep Chicago Livable lawsuit said the ordinance
goes too far, allowing the city instead to trample the constitutional speech,
association and property rights of those seeking to list their dwellings on the
According to the complaint, the city could use the ordinance
to essentially gain control of the dwellings listed by potential home-sharing
hosts – or grant control over those properties to neighbors.
For instance, the lawsuit noted the ordinance gives the city
the power to prohibit home-sharing rentals in certain buildings – and those
buildings can be designated simply at the request of a landlord or member of
the condo association board, without any formal association vote, or formal
lease negotiation, or notice of any sort delivered to any tenant or owner.
Further, the lawsuit asserted the ordinance would subject
potential Airbnb hosts to inspections by the city to see if any food or drinks
are being provided to home-sharing guests.
And the lawsuit alleged the ordinance would deprive hosts of
the ability to determine who is able to enter their homes and listed dwellings,
by designating all such listings as “public accommodations,” subject to the
gamut of anti-discrimination provisions within the city’s code.
“The right to exclude the outside world from one’s property
and the right to permit invited guests of one’s own choosing onto that property
are two sides of the same coin,” the lawsuit said. “By purporting to ban the
ability of owners to host guests of their own choosing without prior permission
from the government, the Shared Housing Ordinance takes away the essential
property right of being able to host guests of one’s own choosing.”
Conversely, the lawsuit alleged, the ordinance in some ways
transfers those property control rights to neighbors through various “hair-trigger”
provisions, “empowering neighbors to shut down hosts by manufacturing ‘excessively
loud noise’ complains based solely on the allegation of an audible sound coming
from a shared home” and other ordinance violations.
The lawsuit also challenged the ordinance’s attempt to cap
the number of home-sharing listings allowed per building, saying it is
unconstitutional for the government to prohibit condo owners to list their
homes on Airbnb and similar sites simply because others in their building
already do. For instance, the ordinance would prohibit more than one dwelling
in a building with up to four dwellings from being listed on home-sharing
sites, and would prohibit more than a quarter of units, up to a maximum of six,
from being listed on the sites in a building with five units or more.
Further, the lawsuit asserted the ordinance violated the
owners’ speech rights, by forcing them to register with the city – or
compelling Airbnb and other home sharing platform operators to “bulk register”
them along with all other hosts listing properties in the city – before they
can even list their property, much less rent it to guests.
Keep Chicago Livable asserted the act of listing a home on
Airbnb and similar sites is not the same as listing a hotel room, as the act is
“social” compared to entirely commercial or for-profit.
“It is overly simplistic and incorrect to assume that the
mere posting of a listing on the internet is the sine qua non of operating a
commercial business or proposing a commercial transaction, or that such a
listing is motivated solely or even primarily for economic reasons,” said the
The lawsuit said the city’s purpose in requiring the registration
was not merely to protect public welfare, but rather to monitor all
home-sharing activity, “in real time,” using software and inspectors specifically
hired for that purpose, thus violating the would-be hosts’ free speech rights.
“The City’s purpose in enacting this registration
requirement is to bring Airbnb hosts out of the shadows and make them disclose
all of their personal information to the Government, as a precondition to their
speech activity,” the lawsuit said.
However, while the city does not make complying with the
ordinance easy and understandable, it makes attempting to comply precarious,
the lawsuit alleged, as the ordinance threatens potential violators with fines
of $1,500-$5,000 per day per violation.
Such fines could be levied against home-sharing hosts for a
range of ordinance violations including failing to take down a listing for a
dwelling in a building in which listing caps had been exceeded, for providing
food to guests, or for failing to have guests sign their names and provide contact
information in a physical guest log book, which the owner is required to keep and
make available to the city upon request for at least three years, among other
“The Shared Housing Ordinance contains punitive fines that
are grossly disproportional to the gravity of the offenses, and are therefore
unconstitutional, unenforceable and void,” the lawsuit said.
The lawsuit also asked the court to strike down the city’s 4
percent surcharge applied to such home-sharing rentals, saying it exceeds the
city’s authority, as it is charged in addition to the city’s regular home rule
Keep Chicago Livable is represented in the action by
attorney Shorge K. Sato, of the firm of Shoken Legal, of Chicago, and attorney Robert
Reda, of Reda & Des Jardins LLC, of Lake Forest.