Is it legal to rent out your home to vacationers by using online rental services such as Airbnb or VRBO? It depends on several factors, such as where your home is located, what type of home you own, and how long you rent it out. And if you rent (don't own) your home, lease or rental agreement restrictions are also an issue. Unfortunately, legal restrictions on short-term rentals are not uniform and can be confusing. Moreover, short-term rental websites currently provide little help to prospective hosts to understand or comply with these laws.
Municipal Restrictions on Short-Term Home 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.
In New York City, for example, residential property located in a multiple residential dwelling unit, such as an apartment building, must be used for “permanent resident purposes.” This means that the property must be occupied by the same person or family for 30 or more consecutive days. It's illegal to have paying guests for less than 30 days--unless, of course, the property is a licensed hotel, bed-and-breakfast, or other similar business. However, there is an important exception: It's not illegal to rent a room in New York City if you occupy your home or apartment at the same time and all parts of the dwelling are available to the paying guest. Violations of the New York law can result in fines of $1,000 to $5,000 for a first offense. In one well-publicized case, a New Yorker who earned $300 by renting his East Village apartment to a visitor from Russia for three nights, was fined $2,400 (the original ruling has since been overturned on appeal by Airbnb).
New Orleans has similar restrictions on the period of short-term rental use. Its local ordinance prohibits property owners from renting their homes or apartments to anyone for less than 60 days in the French Quarter or less than 30 days elsewhere in the city.
Other cities utilize their zoning laws to limit short-term rentals. For example, in San Luis Obispo County, California, a short-term rental home may not be located within 200 feet of a similar rental on the same block. Others impose occupancy limits—for example, in Isle of Palms, South Carolina there is an occupancy limit of two people per bed plus an additional two people.
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. This is the case, for example, in Palm Desert, California; in 2012, it adopted a ordinance allowing short-term rentals of up to 27 days provided that an annual permit is obtained and a 9% transient occupancy tax collected and paid to the city. St. Helena, California and Maui County, Hawaii have enacted similar laws.
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.
Legal Restrictions on Owners of Condos, Coops, and Planned Developments
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.
Lease Restrictions on Renters
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-term rentals and sublets unless the landlord’s permission is obtained in advance. If you violate your lease, you could get evicted by the landlord.
How to Find Your Local Laws and Other Legal Restrictions on Short-Term Rentals
Although this may change, short-term hosting websites haven’t made much of an effort to educate their users about legal restrictions on their activities. For example, Airbnb’s website simply says “please review your local laws before listing your space on Airbnb.”
Finding and understanding laws on short-term rentals can be difficult. The first place to check is your local municipal or administrative code, which may be available online at your local government’s website. To find yours, check out State and Local Government on the Net or Municode. If you can't find your local law online, you may have to read it at your local library or city hall. A call to your city’s zoning board or local housing authority could also prove fruitful. You might also check out the Short Term Rental Advocacy Center, created by Airbnb, HomeAway, Trip Advisor, and FlipKey, for information on restrictions on short-term rentals.
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.