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When a long-term tenant rented out the Las Vegas house he was leasing on Airbnb, the landlord was socked with over $180,000 in fines for dodging city laws on short-term rentals. The tenant then threatened to “send someone” after his landlord if he didn’t agree to release him from any responsibility for damage to the property, according to a federal lawsuit obtained by The Independent.
Landlord Xin Tao, a computer engineer based in Oregon, purchased the house as an investment property and leased it to renter Ryan Murphy beginning in 2021, the lawsuit states. But Murphy’s neighbors soon complained to Vegas officials about cars packing the driveway and noisy disturbances by people who told code enforcement officers they had rented the place through Airbnb.
The City of Las Vegas initially slapped Tao with a $2,132 fine in late 2021 for listing the five-bed, three-bath home on Airbnb. Las Vegas law requires a homeowner to be on-site and occupying at least one bedroom during short-term rentals. Otherwise, owners need a business license to rent.
The fine came as a surprise to Tao, according to the complaint. So he contacted Murphy about the Airbnb rental, which Murphy flatly denied, states the lawsuit, filed against both Murphy and Aribnb.
Murphy insisted the whole thing was a mistake, and said that Tao’s house had been improperly posted on the rental site, and that he had hired an attorney to fight the city’s claims, the complaint stated. Murphy told Tao that it was in fact a nearby home being rented, when in fact he “knew he was illegally renting” Tao’s property instead, and “continually misrepresented to [Tao] that he was not renting” his house, according to the complaint.
Airbnb, meanwhile, allowed Murphy to list his home for rent on its site, “without properly verifying” whether he had the authority to do so, notes Tao’s suit.
Tao didn’t hear from the city again and he renegotiated Murphy’s lease in July 2023 to run through November 2024. But Murphy informed Tao he was moving out in September last year amid a dispute over the condition of the home. That’s when a cleaner sent by Tao to the home discovered a ordered taped to the window noting the fine for the short-term rental violation had ballooned to $180,000, reported the Las Vegas Review-Journal.
Murphy in the meantime, had “drafted a ‘termination agreement” which unilaterally ended the lease and absolved himself of any claims, the complaint states. It also alleges that Murphy warned Tao that if he didn’t agree to his terms he would be putting himself in physical danger.
“I will send someone to find you, and you will regret this,” Murphy texted Tao, according to the complaint.
He also threatened to relist Tao’s home on Airbnb after he moved out, to make Tao’s life difficult, according to the complaint.
Tao then agreed to the termination agreement “under duress,” the complaint states.
Tao was cleared of any wrongdoing, based on Airbnb records subpoenaed by investigators. The records also showed Murphy had rented out Tao’s house for 360 days total, resulting in penalties of $500 per day, according to the complaint.
Murphy, who runs a company providing travelers with short-term rentals, argues Tao was in on the deal, and knew exactly what was going on.
Reached by phone on Saturday, Murphy told The Independent that he markets rentals in “cities with high interest” for tourists, and that “Vegas was one of them.”
“I told him, ‘I own a short-term rental company, I’m not sure it’s 100 percent legal [in Las Vegas], but I think I can get around it,” Murphy said. He noted he has a “background in getting around stuff” — but not always — and pointed to an unlicensed cannabis dispensary he ran in San Diego that racked up nearly $2 million in fines a decade ago.
Murphy claimed he explained everything to Tao, then asked: “Are you down?” He claims Tao said yes, but that’s denied in the court complaint.
Murphy also blamed Las Vegas for the mess. “They had been sending him notices, but he didn’t get them,” Murphy said. “If he had communicated that to me, I would have stopped immediately. [Tao’s] playing the victim, pointing the finger at everyone else, when this really comes down to [a lack of] communication between the city and him.”
As for the “threat” to send someone after Tao, Murphy said he never meant to sound violent.
“It wasn’t like, ‘I’m gonna come beat you up,’” Murphy said. “It was like, ‘I’m gonna file a complaint, or get an attorney.”
According to the complaint, Murphy has done the same thing to other Las Vegas homeowners, “entering into residential leases to illegally rent out these various properties for profit on various hosting and/or accommodation services such as Airbnb.”
Tao is suing Murphy for breach of contract, breach of covenant or good faith and fair dealing, fraud, unjust enrichment, and intentional infliction of emotional distress, while accusing Airbnb of negligence and deceptive trade practices.
He is demanding Murphy and Airbnb turn over to him any profit earned on the rentals, and for Murphy’s assets to be frozen until he repays Tao the $180,000 fine the city levied, plus at least $15,000 in general and special damages, as well as punitive damages and legal fees.
An Airbnb spokesman on Saturday evening told The Independent that the company was unable to comment outside of normal business hours.
