Last Friday at 4pm, the Newport Beach City Council decided proclaim authority over– and to ban– short-term rentals until May the 20th. That’s 7 weeks of rentals that the city is telling homeowners they cannot recoup. From a legal point of view, what the city has effectively done is seize the property. And therefore, the city is on the hook for doling out money for every single rental unit in the entire city for 7 weeks of full-time usage. They won’t volunteer this, of course, and this will very likely end with a class action lawsuit to finally make the homeowners whole.
If the city orders businesses to close or otherwise demands non-competitive use of the property, then the city is on the hook for the economic damages on their decisions– panic over the Coronavirus aside, this is the law. If you are a homeowner or know someone who is, please have them email me at firstname.lastname@example.org to stay abreast of when they can expect their money– because the city currently has no plans to communicate this disbursement, at all.
While some who are looking at the Coronavirus may say “GREAT! That’s what we need them to do!” it is important not to let a virus destroy the rule of law. Yes, they can do whatever they want– this is the nature of government– but they must also legally compensate people that their actions affect. If this were a sweeping law that also affected Hotels, then the city might have an argument, but they stated that the only rentals being shut down were private rentals, which puts them on the hook for losses– or a 14th Amendment violation for not shutting down the hotels, too.
More coverage on shutdowns on the boardwalk, parking, etc, to come in the following days.