98 owners of The Loft Residences who are operating Airbnb in their serviced apartments have filed a civil suit against the developer Syarikat Kapasi Sdn Bhd and its management company WTW Property Services (Sabah) Sdn Bhd in the Sabah and Sarawak High Court.

They are suing both for issuing a notice on 3 Aug 2018 to cease Airbnb activities and to discontinue all commercial activities related to short term lodging/rental within 90 days, ending 3 Nov.

The case will be heard in the High Court on 8 Oct 2018. This may be the first case in Malaysia that will had a far-reaching impact on the Airbnb industry which is emerging in the country, especially Sabah, following the emphasis by the government to promote a shared economy.

Out of 631 units, 200 are engaged in Airbnb activities. However, only 98 agreed to sue the developer and its management company. The reason cited in the notice issued by the management to stop all short-term rental activities being "Kota Kinabalu City Hall has declared all such commercial activities in repect of short-term lodging by way of license and not by property tenancy as illegal."

Failing to comply, the developer stated, according to the notice that was given, they reserve the right to fine offenders after the 90-day period under the House Rules for RM2,00 and RM500 per day if they continue and key access cards with be deactivated. The "House Rules" were introduced by the management of The Loft to govern the occupation and use of the units and the common properties.

The plaintiff who engaged Norbert Yapp & Associates are seeking declaration that The Loft is suitable for all intent and purposes as a commercial development and the 633 units of The Loft as "serviced apartments".