Regulating Transient Rentals

By Stephen Weinstein, J.D. Class of 2018 Touro Law Review  Junior Staff Member

Airbnb; HomeAway; VRBO; Flipkey. The explosion of the sharing economy has led to the creation and massive boom of the short-term residential rental market, also known as transient rentals. Hotels, once regarded as the main lodging for transient guests, are currently losing revenue and market share to transient rental hosting companies.[1] Even though some municipalities have laws in place regulating transient rentals prior to the transient rental market’s recent growth, enforcement of these existing laws have been a major issue.[2] The municipalities that did not have laws in place beforehand are trying to catch up to the rapid expansion of transient rentals in order to ensure enforceable regulations are in place.

A transient rental is defined differently based on the governing jurisdiction.[3] However, generally, transient rentals are defined as a third-party rental of a residential dwelling for a duration of fewer than 30 days.[4] These dwellings may be owner or non-owner occupied.

Local governments may take a variety of approaches to regulate transient rentals. Ideally, local governments base their governing legislation on the needs of their local community members when deciding to regulate the duration, manner, location, and participants of transient rentals in addition to considering the impact it will have on the community as a whole.[5] Some local governments place additional limitations on transient hosts, such as how many times the host may rent his property in a given period,[6] number of units offered in a particular building type,[7] and maximum occupancy,[8] among other limitations.[9] A survey of the current law in several major United States cities portray three main approaches to transient rental regulations with distinct differences among the various jurisdictions.[10] The first approach encompasses local governments that have no laws governing transient rentals, so it is inferred that transient rentals are allowed to operate.[11] Alternatively, if governments have transient rental laws in place, but there are not adequately enforced, transient rentals are able to operate.[12] The second approach encompasses legislation prohibiting non-owner occupied residential transient rentals altogether.[13] The final approach encompasses local governments that explicitly allow transient rentals, typically under 30 days, subject to certain requirements and taxation.[14]

Residential transient rentals are developing into an important economic and hospitality market in the United States, as well as globally. As with any change, fear of the unknown may take over and prevent people from accepting positive forward moving growth. New and amended laws surrounding transient rentals are coming into effect rapidly in an attempt to keep up with the growing marketplace.[15] When a local government is considering enacting a transient rental law, the local government, among other factors, should consider the big picture of how the law will affect its residents, the character of the community, and the revenue opportunity for small businesses and hosts.[16] These local governments should strongly consider enacting a set of laws allowing transient rentals, subject to specified conditions that advance the goals of each unique munici

[1] Biz Carson, Once Someone Tries Airbnb, They’re Less Likely to Prefer a Hotel, says report, Bus. Insider (Feb. 16, 2016), http://www.businessinsider.com/once-someone-tries-airbnb-theyre-less-likely-to-prefer-a-hotel-says-report-2016-2.

[2] Research Dep’t and Internet Bureau, Office of the Attorney Gen. of the State of N.Y., Airbnb in the City 2, 8-9 (2014), http://www.ag.ny.gov/pdfs/Airbnb%20report.pdf [hereinafter Airbnb Report].

[3] See, e.g., Miami Beach, Fl., Mun. Code § 142-1111(a) (2016), https://www.municode.com/library/fl/miami_beach/codes/code_of_ordinances?nodeId=SPBLADERE_CH142ZODIRE_ARTIVSUDIRE_DIV3SUUSRE_S142-1111SHRMREAPUNTO (defining transient rentals as less than 6 months and 1 day); N.Y. Mult. Dwell. Law § 4.8(a) (McKinney 2016) (defining transient rentals as less than 30 days).

[4] N.Y. Mult. Dwell. Law § 4.8(a) (McKinney 2016).

[5] See generally Morgan A. Stewart, Short-Term Rentals: Navigating the New Economic Marketplace, Multifamily Executive (Apr. 26, 2016), http://www.multifamilyexecutive.com/business-finance/commentary/short-term-rentals-navigating-the-new-economic-marketplace_o.

[6] Cleveland, Ohio, Mun. Code § 337.251 (2016), http://library.amlegal.com/nxt/gateway.dll/Ohio/cleveland_oh/cityofclevelandohiocodeofordinances?f=templates$fn=default.htm$3.0$vid=amlegal:cleveland_oh.

[7] Chi., Ill., Ordinances § 4-14-060(e) (2016), https://www.cityofchicago.org/content/dam/city/depts/rev/supp_info/TaxRulingsandRegulations/HotelTax-SharedHousingSubstituteOrdinance.pdf.

[8] Portland, Or., Mun. Code § 33.207.020(a) (2015), https://www.portlandoregon.gov/bps/title33_complete_print.pdf.

[9] Nashville, Tenn., Mun. Code § 6.28.030(Q) (2015), https://www.municode.com/library/TN/metro_government_of_nashville_and_davidson_county/codes/code_of_ordinances?nodeId=CD_TIT6BULIRE_DIVIGERE_CH6.28HORO_6.28.030SHTEREPRST.

[10] This Blog surveyed San Diego, North Las Vegas, New York City, Santa Monica, Miami Beach, Portland, Chicago, Cleveland, and Nashville.

[11]See, Las Vegas, Nev., Mun. Code §17 (2011), https://www.municode.com/library/nv/north_las_vegas/codes/code_of_ordinances; San Diego, Cal., Mun Code § 113.04 (2000), http://docs.sandiego.gov/municode/MuniCodeChapter13/Ch13Art01Division04.pdf.

[12] See generally Airbnb Report, supra note 2.

[13] See, Miami Beach, Fl., Mun. Code § 142-1111(a) (2016), https://www.municode.com/library/fl/miami_beach/codes/code_of_ordinances?nodeId=SPBLADERE_CH142ZODIRE_ARTIVSUDIRE_DIV3SUUSRE_S142-1111SHRMREAPUNTO; N.Y. Mult. Dwell. Law § 4.8(a); Santa Monica, Cal., Mun. Code §6.20.030 (2015), http://www.qcode.us/codes/santamonica/view.php?topic=6-6_20-6_20_030&frames=on.

[14] See, Chi., Ill., Ordinances § 4-13-310 (2016), https://www.cityofchicago.org/content/dam/city/depts/rev/supp_info/TaxRulingsandRegulations/HotelTax-SharedHousingSubstituteOrdinance.pdf; Cleveland, Ohio, Ordinance 30-16 (Feb. 8, 2016), http://www.clevelandcitycouncil.org/ClevelandCityCouncil/media/CCCMedia/Documents/City-Planning-Comm-of-Whole-6-6-16.pdf; Nashville, Tenn., Mun. Code § 6.28.030(A) (2015), https://www.municode.com/library/TN/metro_government_of_nashville_and_davidson_county/codes/code_of_ordinances?nodeId=CD_TIT6BULIRE_DIVIGERE_CH6.28HORO_6.28.030SHTEREPRST; Portland, Or., Mun. Code § 33.207.020(a) (2015), https://www.portlandoregon.gov/bps/title33_complete_print.pdf.

[15]See Avery Hartmans, Governor Cuomo just signed a bill that could deal a huge blow to Airbnb in New York, Bus. Insider (Oct. 21, 2016), http://www.businessinsider.com/gov-cuomo-signed-new-york-airbnb-bill-2016-10.

[16] See Airbnb, Airbnb: Generating $4.5 Billion for Restaurants (2016), https://www.airbnbaction.com/wp-content/uploads/2016/10/restaurant-report-final-10-14-16.pdf; Airbnb Citizen, Airbnb, Airbnb Home Sharing Activity Report: Los Angeles (May 9, 2016), https://www.airbnbaction.com/airbnb-home-sharing-activity-report-los-angeles/) (13% of hosts reported that their income prevented these hosts from losing their home to foreclosure while 10% of hosts reported that their transient rental income saved these hosts from eviction); Things to do, Airbnb, Inc., https://www.airbnb.com/things-to-do (last visited Jan. 30, 2017).

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