Miami Beach's $100,000 Fines for Airbnb Rentals Are Illegal, Court Rules

Miami Beach's crackdown on Airbnb is "in jarring conflict" with a state law capping municipal fines at $1,000 per day, Judge Michael Hanzman ruled.

Massive fines levied against Miami Beach homeowners who rented their properties out via Airbnb are illegal under state law, a Florida judge ruled on Monday.

Miami Beach had imposed huge fines in an attempt to prevent residents from offering short-term rentals. The city argued that the massive penalties—ranging from $20,000 to $100,000—were necessary because smaller fines had been insufficient to stop homes from being rented on Airbnb and similar services. The city has also considered jailing residents who violate a ban on short-term rentals.

But Miami Beach's crackdown on Airbnb is "in jarring conflict" with a state law capping municipal fines at $1,000 per day, Judge Michael Hanzman ruled.

"The caps set by the legislature…may not in the city's view be adequate to force (or motivate) Miami Beach's wealthiest property owners to comply with these ordinances," Hanzman wrote. "The city may (or may not) be correct, but that is a matter it must take up in Tallahassee."

Hanzman struck down the city's ban on Airbnb as "illegal and unenforceable," which means short-term rentals are once again legal in Miami Beach—at least until the city council approves a new ban, which seems likely. For now, that's good news for property owners like Natalie Nichols, the longtime Miami Beach resident who filed the lawsuit which resulted in Monday's ruling.

"This ruling vindicates the property rights of all Miami Beach homeowners who share their homes as short-term rentals," said Matt Miller, an attorney with the Arizona-based Goldwater Institute, which was representing Nichols. "Home-sharers in Miami Beach no longer have to fear that they will end up in financial ruin for exercising this essential property right."

Miami Beach's aggressive policing of short-term rentals has made headlines for years.

But the question of whether the city was allowed to impose five- and six-figure fines for short-term rentals always seemed like a pretty straightforward one. Florida state law is explicit: municipalities may not impose fines of more than $1,000 per day—no small punishment for most people. Indeed, even one Miami Beach city councilman (who supported the city's massive fines) described the penalties as "grossly disproportional but not excessive due to the rental rates that can be commanded here."

The fines are only part of the story. Last year, Miami Beach officials revoked a certificate of occupancy from a home being offered as a short-term rental and ordered utility services to shut off electricity, sewage, and water to the property. The city forced the property owner to prove his home wasn't being used for short-term rentals before it would restore his utilities.

But after this week's ringing defeat in court, Miami Beach officials should recognize that their war on Airbnb is completely out of bounds. Instead of targeting law-abiding property owners with massive fines, the city should go after nuisance rentals (if there are any) using existing laws meant to target specific problematic behavior. Otherwise, the city should mind its own business and let Miami Beach homeowners do as they please with their property.