Chicago Sues Airbnb and South Loop Host Over Hundreds of Illegal Short-Term Rental Violations

The City of Chicago is taking its most aggressive legal action yet against the short-term rental industry, filing a lawsuit in Cook County Circuit Court against Airbnb and a South Loop company accused of operating hundreds of unregistered and unlicensed rental units across the city.

What the Lawsuit Alleges

Filed Monday, the complaint names Airbnb, Inc., its affiliate Airbnb Living, LLC, South Loop-based Slumber Stay LLC, and the company's manager, Milan Rubenstein. The city alleges that Slumber Stay — described in a city press release as one of Airbnb's "most active hosts" in Chicago — received nearly 200 citations in 2024 and 2025 alone for violating the city's Shared Housing Ordinance and related consumer protection laws.

According to the lawsuit, Slumber Stay repeatedly failed to register short-term rental units with the city and used a non-transferable hotel license number assigned to its Michigan Avenue property across multiple unrelated properties in Pilsen, the West Loop, and Bronzeville. The complaint further alleges that despite admitting liability and paying fines for prior violations, Rubenstein and Slumber Stay continued to list and rent units unlawfully.

Slumber Stay is just one of 11 companies through which Rubenstein offers short-term rentals on Airbnb and other platforms. His Chicago-area apartment portfolio once included 740 units, and he acquired a 344-unit complex for $24.2 million in 2014, according to the complaint.

Airbnb Also in the Crosshairs

The city's lawsuit doesn't stop at the host level. It accuses Airbnb of processing bookings for unregistered and unlicensed units, knowingly or negligently allowing hosts like Rubenstein to operate in violation of local law, and rejecting a "years-long effort" by the city to cooperate on compliance. The complaint characterizes Airbnb as "prioritizing profit over compliance with City law."

Airbnb declined to comment on the pending litigation but issued a statement saying it is proud to offer Chicagoans a way to share their homes to help cover rising living costs.

Why It Matters

Chicago enacted its Shared Housing Ordinance in 2016 to regulate the rapid growth of platforms like Airbnb and Vrbo. The City Council strengthened the ordinance in 2020, adding location restrictions, caps on the number of short-term rental units per building, and mandatory city registration requirements.

The city argues that failing to enforce those rules harms multiple parties: renters who unknowingly book unlawful units, residents who find illegal rentals operating in their apartment buildings and neighborhoods, and law-abiding competitors who follow the rules.

"Requiring short-term rental companies to follow the same rules as everyone else is critical to our work of building a safer, more affordable Chicago," Mayor Brandon Johnson said in a statement announcing the suit.

What Comes Next

The city is asking the court to bar the defendants from renting or brokering unlawful short-term rentals and to impose fines intended both to punish the alleged misconduct and deter similar behavior across the industry. An initial hearing is scheduled for August 21 at the Richard J. Daley Center.

Residents or consumers who want to report experiences with short-term rental violations can contact the city at consumerprotection@cityofchicago.org.