Vacation Rentals Update:
Congress Passes New Law Regulating
Short Term Rentals
Our state legislature and Governor have spoken, and short-term rentals are here to stay. Since the inception of online platforms like VRBO and Airbnb nearly a decade ago, short term rentals have steadily grown in popularity, in terms of demand and availability. The opportunity to rent a home or condo for a short duration provides new income opportunity to owners, and new lodging options for travelers and local residents alike. But not everyone is thrilled about short-term rentals in their neighborhoods. Stories abound about wild bachelor parties, wedding venues, and other large groups.
In 2016, Arizona passed SB1350 affirming short term rentals in Arizona. That law declared that short term rentals are generally welcome in Arizona and made it illegal for cities or towns to restrict short term rentals. Since then isolated battles have been brewing between local residents and “party house” operators. Most property managers and owners are responsible, respectful neighbors, but the small minority of irresponsible owners have rightfully garnered headlines. In response, Congress recently enacted HB 2672 to place reasonable restrictions on short-term rentals to encourage owners and property managers to be conscientious of their neighbors. Click here to view the entire bill:
First, HB 2672 affirms that short term rentals are lawful in Arizona, and municipalities shall not prohibit short-term rentals.
Second, the new law requires all short-term rental owners to obtain a transaction privilege tax license and to list the tax number on all advertisements. See A.R.S.§ 42-5042. Failure to do so will result in civil penalties. Id.
Third, the new law requires owners to provide contact information to the local government so that any violations of local ordinances can be timely addressed. If contact information is provided, then the town or city shall make a reasonable attempt to notify the owner of any complaints received regarding the rental property.
Fourth, the new law provides that the town or city shall notify the owner and the Department of Revenue, within 30 days, if any complaints are received that result in verified violations and civil penalties.
And finally, the new law provides that short term rental properties may not be used for “special events” that would otherwise require a permit or special license. This requirement is appropriately aimed to stop loud parties and other large gatherings that could disrupt the peace and quiet of neighborhoods.
In sum, the aspirational new law aims to appease most of the interested parties. The owners and property managers are affirmed in knowing that the State is not taking away their right to utilize their properties for short term rentals. Neighbors may be encouraged that they now have a direct line with the owners, property managers, or the State to lodge complaints regarding loud party houses. And it is now easier for the government to collect the higher taxes placed on transient lodging (short term rentals).
Mr. Charles has advised owners and property managers concerning short-term rentals since before they surged when the Super Bowl last came to Arizona in 2015. If you or someone you know needs help with a short-term rental agreement or need help with any other matters concerning short-term rentals, contact our office today to speak with Mr. Charles.
Christopher J. Charles is the Founder and Managing Partner of Provident Law®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS® (the “AAR”). He is also an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee from 2011-2015 where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. Christopher is a licensed real estate instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at chris@providentlawyers.com or at 480-388-3343.