If you haven’t heard yet, there’s a trailblazing tenant who has lit a fire under the short-term rental industry. 

Here’s the short version of the story from popular reports. An Airbnb host booked a guest to stay for six months, toward the end of the agreed-upon term, she extended her stay for another 24 days. At some point during this extension, the host entered the property to fix an issue with the blinds and noticed water damage and mold. 

As any sensible landlord would, he suggested she vacate the premises while he fixed the mold and water damage to which she flatly refused. Sascha Jovanovic, the owner/host, offered his guest stay in a hotel for the duration, however, since this took place in 2022 among COVID-19 restrictions (her stay began in September 2021), she refused to leave due to housing disability and a chemical sensitivity. At that point, Jovanovic offered for his guest, Elizabeth Hirschhorn, to stay in his home with his family.

That’s when the situation really began to sour. Unfortunately, the invitation to “move in” was poorly received.

If you want to be a landlord, then you’ll also want to be sure your unit is up to code and registered.

How Did the Situation End up in Court?

It’s been over 500 days since Hirschhorn began occupying the premises. Jovanovic is currently in a legal battle with her and her lawyers to have her removed from the guest house on his property where she has been living since September 2021.

A multitude of factors combined to create this tense situation, so let’s take a closer look.

Tenant Rights

Every state has different laws in place to protect tenants, so I won’t go into detail here. If you’re curious about what laws your state has, you can check out the records on this online portal or contact your local housing authority.

The state of California, where this legal battle is taking place, has gone through some recent changes regarding tenant rights. So, once Hirschhorn had been on the property for six months, she was eligible for the Just Cause Ordinance meaning Jovanovic had to have a legal reason to evict her.

Here’s where things get a little dicey.

Rental Permits

If you want to be a landlord, then you’ll also want to be sure your unit is up to code and registered. The owner of the Brentwood estate in question didn’t complete all the necessary paperwork for this, and it has led to the tenant stating he must pay her all the rent she’s given him if he wants her to vacate the premises.

The judge on the case for the four complaints Jovanovic made against Hirschhorn (breach of lease, damages for unjust enrichment, negligence, and trespass to real property) has dismissed the case.

Now, this Brentwood dentist and Airbnb host might have to pay her $100,000 just to get her to leave his property. Not to mention, she’s been living rent-free since she first refused to leave in April 2022.

What were the specific issues that led to this case’s dismissal? 

On top of the Just Cause Ordinance, the unit was never cleared for rental. Jovanovic rented it on Airbnb without having it registered, so there is no certificate for occupancy. Also, there was a shower built in the unit without a permit. Hirschhorn’s lawyers claim that with the current standing of the unit, the legal rent he can charge is $0.00. This is what led to Hirschhorn’s demand for all paid rent to be returned.

The entire situation has turned into a catch-22. With the unit not being up to code, the claims have been dismissed, and yet Jovanovic is being refused entry to bring the unit up to code.

As an industry expert speculating on the situation, I can’t attest to which party will win the battle. However, it does make me wonder how many of these Airbnb hosts have their units up to code and properly registered with occupancy certificates. I’d hazard a guess that the answer is not 100%.

This isn’t the first time an Airbnb guest has refused to leave, and I highly doubt it will be the last.

It Could Happen to Anyone

Sascha Jovanovic is a global dental expert and renowned periodontics dentist. He bought his home in 2009. While rebuilding the main house, he had the guesthouse constructed on the .33-acre property next to his home and pool. It was “an oasis” for guests according to reviews. 

The unit allegedly has sliding doors that open to panoramic views of the ocean, canyon, and city lights. It has a kitchenette, bathroom, bedroom, all the typical things one looks for in a rental. Sascha Jovanovic wasn’t a first-time landlord, he’d rented out his unit many times, and prior to September 2021, he had glowing reviews. 

Previous guests described him as “going above and beyond.” Unfortunately, he’s had to cancel all upcoming bookings for the unit, which has not only affected the prospective guests but also his bottom line.

What had once been a seemingly profitable unit going for $215/night hasn’t seen any revenue in over a year.

With so many short-term rental companies and the wide use of them for longer living arrangements, this may be a precedent-setting case.

Squatters vs. Tenants with Legal Backing

Some may refer to those who live in a dwelling and refuse to pay rent as squatters, but as you can see from the link above, there are many legal statutes in place to protect renters (depending on where you are located).

So, you may wonder, what can you do if you find yourself in a similar situation? 

You may want to try to avoid it to start with! 

However, this isn’t the first time an Airbnb guest has refused to leave, and I highly doubt it will be the last. With a simple online search, one can find dozens of forums about how to deal with squatters, Airbnb guests overstaying their welcome, and tenants refusing to leave.

Airbnb offers some tips on their website about what to do in just such an instance. If you are specializing in short-term rentals, you may want to specify in your lease agreement what this looks like to avoid guests overstaying their welcome. 

Further Implications of This Legal Dispute

The situation between Jovanovic and Hirschhorn is far from resolved. The two still live steps away from each other. These neighbors have a lot more to contend with than loud music, and I believe this case may be more than a civil disagreement. With so many short-term rental companies and the wide use of them for longer living arrangements, this may be a precedent-setting case.

Take time to vet your guests, and be ready for mortgage fluctuations with your pricing and what that will mean for your investment portfolio.