Short-Stay Rentals Might Carry Legal Consequences

Filed under: Real Estate Law

It is often said that the Internet changed everything about how we live, work, travel, do business, and more. And once again, we’re seeing that idea played out in the legal arena. This time, it’s short-stay rental agreements (think of websites like Airbnb and VRBO) in the spotlight.

It might seem like a no-brainer: List a room (or the whole house, condo, or apartment) on a website, your renter gets a good deal, you collect a profit, and everyone is happy. But short-stay rentals are actually triggering some surprising consequences for some homeowners, to the extent that consulting a real estate attorney is a good idea before diving into your newest money-making venture.

You could violate your lease. Renting a room on Airbnb, for example, might count as a “sub lease”, which violates the terms of your rental agreement. Doing so could lead to legal action or even eviction.

Your homeowner’s association probably prohibits short-stay rentals. Check your HOA documents before renting out your home, or even just a room, on a short-stay basis. Breaking your HOA agreement can result in fines or even legal action.

Some cities require a business license for short-stay rental management. Many cities and counties are outright banning short-stay rental arrangements, while others require you to have a business license before conducting such transactions. Keep an eye on local politics; even if renting a room on Airbnb is totally legal now, things can change quickly.

You will owe taxes on your profits. Nearly every city and county in California imposes a tax on short-stay, or transient occupancy, rentals. You might be required to register your property, disclose profits, and pay taxes on the money you make from renting out a room or building.

Websites like Airbnb or VRBO can offer a great way to make a little side income, but they continue to pose a legal challenge. If you want to participate in one of these sites, do your homework first. Call our real estate attorney for more information on the specific laws in your area, so that you can avoid any serious repercussions down the road.

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