How Do I Cover My Legal Bases For A Short-Term Rental

The topic of web-based, short-term vacation rental properties has dominated the news headlines for the last few years. From the customer’s viewpoint, they are more appealing than ever, however, many municipal, local and state regulatory entities are continuing to struggle with issues concerning whether and in what manner this emergent industry should be governed.

What Are Short-Term Rentals?

Short-term rentals are defined as residential units, or in specific instances a single room within a larger unit, in which the owner or operator leases to customers for a period of less than 30 nights per transaction. Some owners of residential properties may wish to utilize their residence to offer this type of property to potential customers as an alternative to the normal hotel options that those visiting Tacoma have to choose from. Short-term rentals in the city are permitted in several locations; however, there are some limits and regulations that have been implemented with the intention to make sure that these short-term rentals are run in a safe and responsible way and will not negatively impact the surrounding community writ large.

Examples of Short-Term Rental Property Categories

  • Bed and Breakfast (B&B’s)
  • AirBNB and VRBO listings
  • Any leasing of an entire residential property for less than 30 nights
  • Any leasing of an entire secondary residence for short-term periods, including an accessory dwelling unit (ADU) or “mother-in-law” property
  • Any leasing of separate units with a larger property for a period of less than 30 nights

Must I Reside in the Unit for it to Qualify as a Short-Term Rental?

As the owner or operator, you must live in the given property if renting out separate rooms within your house or an ADU. Alternatively, if you are renting out the entire property, then it is not a requirement that you officially live on-site.

You are permitted to lease the entire property to a single family or a group of up to six individuals in all Residential, Commercial, Mixed-Use and Downtown Districts in the city of Tacoma. You are allowed to rent an alternative dwelling unit to a group of no more than four individuals in all Tacoma Residential, Commercial, Mixed-Use, and Downtown Districts as well. You may only lease one to two guest rooms that are located within an owner-occupied unit in Tacoma Residential Districts. Homeowners are allowed to lease out three to nine guest rooms after obtaining an approved Conditional Use Permit (CUP) in R-3, R-4L, R-4, R-5, RCX and NRX Districts—which are typically residential areas that permit duplexes, triplexes and multi-family residences.

Actions to Cover Your Legal Bases Before Operating a Tacoma Short-Term Rental

  • Acquire a City of Tacoma Business License by contacting the City’s Tax and License office. A Transient Accommodation License is also a requirement if you plan to rent three or more separate rooms within a larger residential property.
  • Ensure that you have posted a safety sign in all rooms or units for rent that clearly indicates where the fire extinguishers, gas disengagement handles, emergency exits and fire/carbon monoxide alarms are located.
  • Make sure that you have tested and replaced the batteries in all carbon monoxide and fire detectors and that they are working properly.
  • Contact the State Department of Revenue to ensure compliance with the applicable regulatory and tax mandates.

Projecting Future Developments in the Short-Term Rental Legal Compliance Sector

For the majority of communities in the state of Washington and similar locations that lack an overly active tourism industry, short-term rentals are not really an area of concern and the respective local governing bodies do not typically have specifically-crafted statutes or ordinances concerning them. On the other hand, for governments in locales that draw heavy tourist traffic—either seasonally or transiently—the need for regulatory action is currently being contemplated or, alternatively, has already been enacted.

Both the Kirkland and Walla Walla local governments have imposed relatively new regulatory frameworks applicable specifically to short-term rental properties. Additional municipalities, including Seattle and Bellingham, are currently in the process of crafting similar legislation for this unique subcategory of rental properties.

The majority of local and state regulatory agencies harbor a similar list of concerns regarding the issue of the expanding short-term rental market—which includes, but is not limited to the following:

  • Collecting lodging and sales taxes on short-term rental property transactions;
  • Effectively controlling traffic patterns, shortages of available parking spaces, and regulating associated tangential effects that short-term properties have on nearby communities; and
  • Remaining compliant with existing health and safety protocols that are generally applicable to similar temporary residential properties including hotels, motels, B&Bs, etc.

An additional area of growing unease for local government is the purported negative impact that short-term rental properties will have on a given locale’s affordable housing availability. From a governmental perspective, the issues is not necessarily about a short-term rental property owner or operator leasing a room or unit to mitigate their periodic mortgage fee. The real concern is that the owner will buy residential property and market them as short-term vacation rentals to visitors that are not local citizens, thus removing these potential residences from the annual rental housing market.

One just has to look to Canada for a potential indication of how local governments may choose to mitigate this pressing housing concern. The legislature in Vancouver, BC recently implemented laws permitting homeowners or landlords to lease a portion or the entirety of their primary residence, but bans the rental of a secondary residential unit—also referred to as a “laneway home” in BC or what we in the United States would label as a detached accessory dwelling unit (ADU). A significant motivating factor for the statutory implementation in British Columbia was the fear that short-term residential rental properties would over-saturate the already crowded rental housing supply.

Contact a Trusted Tacoma Real Estate Attorney Today

At Bolan Law Group., our Tacoma real estate attorneys have over 30 years of collective experience crafting innovative and workable solutions to a wide variety of legal scenarios. Let us start leveraging that insight to resolve all your real estate law issues today by contacting us online or giving us a call.

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