Understanding Legal Issues for Airbnb Short-Term Rentals

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Airbnb has changed the short-term rental and vacation rental business forever. It’s essentially created a way for homeowners to generate a substantial passive income on rental properties without the risk of liability (because Airbnb comes with a $1 million insurance guarantee) or any of the strings that come attached to a conventional residential rental contract. The service has become especially popular in larger urban cities, where real estate investors use it to monetize their portfolios. If you are considering using this service, make sure you are aware of some of the important laws in Arizona about short-term rentals before you get started.

Arizona Allows Short-Term Rentals

Newer laws have been enacted in Arizona that protect homeowner’s rights to use this rental service. In fact, these new laws mandate that no municipality can restrict short-term rental properties in the state. There are also zero restrictions on how many properties landlords can own and rent, or a limitation on how a short-term rental can still be considered “short-term” after 30 days of occupancy.

Arizona Approves of Airbnb

According to Senate Bill 1382, which was passed by a majority in the state recently, online rental marketplaces like Airbnb are fully approved to operate in this state. However, they are required to tender all state and local taxes on behalf of the homeowner. This means that if you are using this service, you won’t have to make separate property rental tax payments for any rentals you get from this service, but you will still need to keep receipts and your paperwork handy. Rentals booked outside of this service, however, will still need to be tracked and reported with the proper taxes tendered each year to stay in compliance as a landlord.

HOAs Have Power

One thing to keep in mind is an HOA. If you own a home that’s governed by an HOA community, there may be restrictions or limitations that have been set forth by the HOA. Some HOAs have outright banned Airbnb and similar services. Others have light restrictions, and some don’t care. While it may be frustrating, the HOAs do have a right to enforce community voted protocol. If you’re considering investing in a property to use a short-term rental, make sure that there aren’t restrictions imposed by an HOA that would hinder your efforts beforehand.

When in Doubt: Ask a Lawyer

Services like Airbnb have caused cities to rethink short-term real estate rental markets. While hotel chains may not like them, they are solid revenue drivers for cities and states, who reap the reward of added rental taxes. Still, it’s important to understand how the law works and your rights as a homeowner or property investor first. Another important step that you can take when considering listing your home on a short-term rental service is to seek a consultation with an experienced Arizona real estate lawyer. They can provide adequate legal counsel and help you better understand how any existing laws and HOA restrictions may impact your ability to use this service.