Airbnb and other online short-term rental services have created a way for homeowners around the world to create cash flow for their properties. In effect, any property owner can turn their home or condo into a hotel and rent it to a huge market of visitors looking for a reasonable price on their vacation rental. From the perspective of investors with multiple properties, this has been a fantastic new development, creating competition with local hotels. However, many homeowners are not too excited about turning their neighborhood into a revolving door for tourists. These opposing positions have created some complicated legal issues for both sides of the argument. Whether you’re looking to rent your property out with one of these services or restrict the ability of your neighbors to use these services, there are some important laws in Arizona about short-term rentals you will want to understand first.
Arizona Municipalities Must Allow Short-Term Rentals
A new law was enacted on January 1, 2017 in Arizona, declaring that cities, towns and counties cannot place any restrictions on short-term rental properties just because the property is not classified as a hotel. This law specifically targeted any municipalities that were trying to restrict Airbnb and other online lodging marketplaces from operating in the area. The law states there are no restrictions on the number of properties an investor can own and rent using these short-term online rental services. Neither is there a limit to the number of days a home can be rented out in a given area.
Arizona Senate Bill 1382 for Lodging Marketplaces
On April 11, 2018, Arizona enacted Senate Bill 1382 that requires any online lodging marketing places operating in Arizona to remit all state and local taxes. This clarification means that the individual property owners do not need to individually collect and pay any additional taxes. The online services would be responsible for collecting these taxes from any renters and making payments to the state and local authorities. This should be welcome news for any property owner renting properties with these online marketplaces. It means they will not have to worry about collecting and paying separate taxes from a short-term tenant.
HOAs Can Still Ban Short-Term Rentals
Before you purchase an investment property with the goal of using a short-term rental service to generate cash flow, you want to make sure to carefully review the rules around this option if the property has a homeowner’s association. Land use restrictions within the homeowner association’s governing documents arises under contract law. Therefore it is still legal for the homeowner’s association to place restrictions on the length of a lease or completely ban short-term rentals. An investor should work with a real estate attorney to make sure that their desired income strategy for the home falls within the HOA CC&Rs before moving forward with any purchase.
There are many valid reasons for a homeowner to have concerns about short-term rentals popping up in their neighborhood. Many of the people renting these places are there for just a few days on vacation and do not have any concern for the long-term atmosphere in the neighborhood. It’s clear that there can be many issues with a family-friendly neighborhood suddenly being turned into a hotspot for tourists, only there to party and leave the area a mess.
Homeowners associations can place a ban on short-term rentals. However, most HOA CC&Rs will require a majority vote to make this change. It can even require a unanimous decision in some cases. You will want to reach out to your neighbors to gauge their support for a major change to the CC&Rs before bringing it to a vote. There could be neighbors that would prefer to keep the ability to earn short-term income if they are not able to sell their home or they move. It is common in many of these cases that a vocal minority can make it seem like there is more support for a ban than really exists.
MacQueen & Gottlieb has significant experience with short-term rental laws in Arizona. Our attorneys can help you with any legal issues regarding an Airbnb or other online lodging marketplace rentals. Our firm can also assist with the process of limiting short-term rentals in your neighborhood. Contact us today at 602-533-2840 or make an appointment online.