Platforms like Airbnb, its lesser known rival Vrbo, and increasingly prevalent independent listings, provide a relatively simple way for property owners to use their idle properties to make extra money renting their properties to vacationers and other short–term guests. Many entrepreneurs also buy properties for this express purpose. This can be a profitable endeavor for the right property, in the right location. Hosts using Airbnb alone saw 50,430 guests at their rental properties in Jefferson, Lewis, St. Lawrence, Clinton, Essex and Franklin counties between Memorial Day and Labor Day 2019, up from the 36,000 for the same period in 2018.
Demand for these short–term rentals has boomed since the start of the pandemic. Business has picked up along with the recovery in travel that began early this year as Americans began to get vaccinated. But many travelers are still looking to avoid crowds and hotels, creating an advantage for short–term rentals. The advantage is especially pronounced for more secluded listings, or those that offer abundant outdoor recreational opportunities. These are exactly the types of short–term rental offerings that proliferate in the north country. Proponents and local chambers of commerce have emphasized the region’s advantages, touting the regions’ scenic landscapes, and ample hunting, fishing, and other outdoor activities. They also espouse the benefits for local retail and hospitality businesses.
Hosts, however, should remember that renting out a lake house or wooded cabin is a business and it’s important to heed applicable laws, rules, and regulations. The platforms that have made so many owners part time hoteliers provide them very limited legal guidance. This article will address a few of the things prospective hosts should keep in mind.
Depending on the municipality, hosts may be required to obtain a business license before operating short–term rentals. Local government websites may contain information about what businesses require a license, and instructions on how to apply.
Nearly all municipalities have rules and regulations specifying minimum design, construction, and maintenance standards for buildings. These include regulations applicable to habitability, safety, and health, including things such as smoke and carbon monoxide alarms, and fire extinguishers. Some municipalities may also require short–term rentals to undergo an inspection by a local codes enforcement officer before being listed.
Most municipalities also have a zoning code that sets forth which uses of real property are allowed and not allowed in each areas of its jurisdiction. Although not all zoning codes specifically address short–term rentals, it’s prudent to review the allowable uses to determine whether that use is specifically mentioned. Hosts may be required to seek a special use permit or even seek a variance before listing a unit.
It is increasingly common to see stringent government enforcement of these various rules. In years past, enforcement was often limited to responding to neighbor complaints, meaning that for many secluded units, almost never an issue. However, this is less frequently the case as the short–term rental market has blossomed.
Landlord Tenant Laws:
Short–term rental guests who agree to rent the “short–term” unit for longer than 30 days gain the legal status of tenants. This could prove problematic for hosts if they refuse to vacate the property at the end of their agreed upon stay. Landlord-tenant laws can be onerous for the landlord and it could take months to remove the occupant.
Multiple Dwellings Law:
Listing an entire apartment for rental of less than 30 days is illegal under a 2016 New York State law. That law, Section 4 of the Multiple Dwellings Law, applies to residential buildings with three or more units. So if you rent a unit in an apartment building with three or more units, you cannot list your unit for a short–term rental. The state may choose to impose fines on hosts who post listings in violation of the rule. These can cost hosts $1,000 for first and second violations and $7,500 for third and subsequent violations.
Private land use controls:
In addition to all the government rules, if a property is part of a home owners association, co-op, condominium, or if the host has a landlord, there may be additional rules to comply with. Hosts should refer to the rules of whatever private housing governance document is applicable to their property. These are usually referred to as either covenants, conditions, and restrictions, or bylaws. Tenants should check your lease. Failure to abide by these rules can land hosts an onerous fee or, if not the property owner, evicted.
Hosts should check their insurance policies or call their agents to determine if their renters or homeowners policy covers damage caused by paid guests. Platforms offer some limited forms of insurance, Airbnb calls this their “Host Guarantee,” but it can prove a poor substitute for more traditional coverage. It’s important to ensure liability and property protections extend to potential harm to, or stemming from, guests.
In addition to tracking the revenue earned from a rental for income tax purposes, hosts may be required to collect local occupancy taxes, sometimes referred to as a “bed tax,” for each overnight stay in your rental. For instance, St. Lawrence county charges the state minimum 3% bed tax, and in 2016 modified its room occupancy law to encompass units being rented through short–term rental platforms. In some jurisdictions, the platform will automatically collect the tax on hosts behalf and remit it to the appropriate local government. Airbnb has tax collection agreements with at least 34 upstate counties. Hosts may also need to register for tax identification numbers.
Rules applicable to a business depend upon the property and jurisdiction. Owners can benefit from the advice of experienced legal counsel to ensure compliance with applicable rules and laws. If you have questions concerning a short–term rental, the attorneys at the Wladis Law Firm may be reached at (315) 445-1700 or by emailing Chris Baiamonte at firstname.lastname@example.org.
Christopher baiamonte is a member of the Wladis Law Firm, P.C., located in Syracuse, New York, and can be contacted by calling 315-445-1700.