With the exponential growth of short-term rental companies like Airbnb and VRBO in recent years, vacation rentals are of increasing concern to homeowners and can put strain on the relationships of neighbors.
On one hand, owning property comes with a “bundle of rights,” including the opportunity to rent property to another individual and to make money doing so.
Advancing technology has expanded choices for consumer travel and changed the traditional rental market time frames to much shorter periods.
One source of strain is the difficulty in balancing rights of one party to earn money with the negative effects if a neighbor is renting their home as a “party house.”
If you’re against short-term rentals, the bad news is that there’s evidence that platforms such as VRBO and Airbnb have now become an accepted way to book a vacation.
The good news is that in areas where short-term rentals are accepted or encouraged, your neighbor’s use of a home as a vacation rental may result in raising the value of your home.
While you may believe that your neighbor’s use of their home as a short-term rental is a new phenomenon, it is not.
The history of using a residence as a vacation, or short-term rental, shows that these uses are not going away.
These uses date back as far as the mid-1600s and researchers believe the first vacation rental property was Louis XIV’s Palace of Versailles.
In 1995, the Internet led to Vacation Rentals by Owner (or VRBO). VRBO initially consisted of one listing for a property in Breckenridge, CO. Ten years later, HomeAway launched as a merger of five different vacation rental sites.
HomeAway subsequently purchased VRBO and its inventory of listed vacation rentals soared to several hundred thousand.
By 2015, the vacation rental industry was worth more than $85 billion and HomeAway alone had more than 2.8 million rooms available – more than the four largest hotel chains in the world combined.
And the average homeowner utilizing their home for vacation rental purposes is earning nearly $30,000 annually.
With the exploding number of vacation rentals, there are bound to be conflicts.
If you are a homeowner negatively affected by short-term rentals in your neighborhood, your first response should probably be to try an informal conversation with your neighbor addressing your concerns. If that does not work, you may want to see if your neighbor’s use of their home as a short-term or vacation rental violates local code; if so, your next step would be to contact local officials and report the violation.
For example, in Scottsdale, homes available for rent are permitted to have a maximum family size of six adults (and their related dependent children). This is violated every night in many parts of Scottsdale.
Even if there are no code violations, you may have a claim that your neighbor has created a nuisance, thereby entitling you to money damages.
Another option is to scour any deed restrictions, CC&Rs, or HOA rules of your community to determine if any are being violated.
Many CC&Rs prohibit rentals of less than 30 days and many deed restrictions prohibit the use of homes as businesses.
Yet another option is to seek an injunction, a court order that the renting must stop for a certain amount of time.
If you are a homeowner that opens your home to short term guests, be a good neighbor.
Communicate with other homeowners about the use of your home and provide neighbors with your contact information or property manager's.
Assure your neighbors that statistics show that short-term rentals may actually increase the value of homes in the neighborhood.
Specifically, the homes available for short term use are usually cleaner than most homes in the neighborhood due to the mandatory cleaning after guests depart; the curb appeal is usually higher; and the homes being utilized as short-term rentals are often more up to date, as owners need to stay competitive with other homeowners in the area using their homes as rentals.
And, of course, follow up with your neighbors as to whether any issues occur.
The only rules of much significance require an owner to obtain a transaction privilege tax license and display the license number in any home listings and to provide contact information to local authorities. That’s it.
But, as an owner of a short-term rental, continue to monitor the laws, as they are very much in flux.
-Attorney Patrick MacQueen is a co-founder of the Phoenix law firm MacQueen & Gottlieb, ranked as the state’s top real estate law firm. Information: MandGLawGroup.com, 602-533-2840.