Analyzing Short Term Rental Restrictions

By: Lance T. Denha, Esq.

According to the National Association of Realtors Survey, many of the respondents purchased a vacation property for personal use, but, of investment buyers, fifty percent purchased with the intent of renting to others. Renting out a vacation home can offset the costs of this investment until retirement. But what happens when a community acts to restrict short-term rentals?

Many cities, counties, and other municipalities have legal restrictions on short-term home rentals. These vary greatly from place to place. The restrictions in some cities are quite severe and make most short-term rentals illegal. Other cities utilize their zoning laws to limit short-term rentals.

On the other end of the spectrum, some cities and municipalities have much more liberal rules. Some allow short-term rentals so long as the property owner registers with the city, and/or obtains a license or permit, and pays all applicable fees and taxes.

The legal restrictions on short-term home rentals described above are haphazardly enforced at best. Typically, due to a lack of manpower, cities and other municipalities don’t spend much time or effort on this issue. Indeed, most often they are unaware that short-term renting is going on. Usually, enforcement efforts are undertaken only when neighbors complain.

If you live in a condominium, cooperative, or planned development, your use of your property is governed by deed-like restrictions commonly called covenants, conditions and restrictions (CC&Rs) or bylaws. These may bar short-term rentals entirely, or subject them to restrictions. Unlike zoning laws or local ordinances, CC&Rs are enforced by the homeowners’ association or coop board, which may impose fines on violators and place liens on the property to collect them.

If you’re a renter, you need to carefully check your lease before you rent your apartment on a short-term basis. Most leases contain provisions restricting or prohibiting short terms rentals and sublets unless the landlord’s permission is obtained in advance. If you violate your lease, you could get evicted by the landlord.

The website for Airbnb has a summary of the legal requirements, with links for more information. If your city isn’t listed here, the first place to check is your local municipal or administrative code, which may be available online at your local government’s website. If you can’t find your local law online, you may have to read it at your local library or city hall.

If you own a condo or coop, ask your homeowners’ association or coop board about its short-term rental policies. If you’re a renter, check your lease or rental agreement and talk to your landlord before renting out your unit.