The provision of short-term rentals via online platforms such as Airbnb, FlipKey and HomeAway is part of the growing “shared economy.” In 2017, the Virginia General Assembly established a framework by which local governments may regulate these and other short-term rentals. The law defines a short-term rental (STR) business as “the provision of a room…intended for occupancy for…lodging purposes, for a period of fewer than 30 consecutive days, in exchange for a charge….”
Homeowners, landlords, or tenants considering whether to cash in on the STR trend, or board members of an HOA or a condominium association deciding whether (or on what terms) to allow STRs, must be prepared to address the land use and liability issues surrounding STRs. Here are a few key considerations to keep in mind:
- First, don’t assume that because your jurisdiction has no specific STR regulations that it is legal to operate an STR. For example, until Fairfax County amends its zoning ordinance to define STR parameters, STRs are not permitted there (unless an expensive “bed and breakfast” zoning special exception is obtained).
- Second, if an STR is (or becomes) legal in your locality, an HOA or a condominium association may still ban or limit STRs in its community – but it will face challenges if it wishes to do so. The association will need to undertake a legal review of its governing documents to determine whether they currently allow (or disallow) an STR. A formal amendment process will be needed to the extent the association wants to clarify or further define members’ rights to run (or not run) an STR.
- Third, if a landlord wishes to prevent a tenant from operating an STR, the landlord must ensure that the lease prohibits it.
- Fourth, don’t assume that STR regulations will be consistent among jurisdictions. Although such regulations may contain similar elements (e.g., annual registration fees, and safety, health and building code requirements) each locality is likely to have a different set of requirements to navigate. For example, Arlington County’s new “accessory homestay” ordinance requires, among other things, the unit to be the operator’s primary residence and occupied as such at least 185 days per year; limits the number of guests but allows more than one STR contract at a time; disallows the use of the unit for any other commercial use such as parties, banquets, and fund raising; and requires a business license and the collection of a 7.25% Transient Occupancy Tax.
- Fifth, don’t assume that the STR platforms or the “guest” will bear the risks associated with the homeowner running a home-based hospitality business. For example, what if a “guest” causes a fire, breaks the homeowner’s furniture, damages HOA-owned property, or gets injured in the property? Insurance industry experts warn that typical homeowners insurance policies may not cover these occurrences because they involve the commercial use of a private residence.
It is likely that soon most Northern Virginia jurisdictions will, subject to varying restrictions, allow STRs. But since running an STR is a regulated business, those seeking to engage in this business, or to otherwise limit or prohibit STRs, are well advised to seek appropriate legal advice in order to comply with the applicable legal and regulatory requirements.