Tacoma city officials recently conducted a study session to determine what, if any, restrictions might be placed on informal, short-term real estate rentals, like those available through the popular online application, Airbnb. According to city officials, Tacoma currently has no special rules for the short-term rentals. The most proposed restrictions signal that Tacoma is still very business-friendly to entrepreneurial efforts.
Proposed Regulations Could Be Voted on Soon
Currently, a City Council vote on the proposed regulations is scheduled for August 2. If passed as proposed, the regulations would require at least the following:
- The purchase of business licenses from the city, with the cost set at $25 for owners who expect to make less than $12,000 a year on their rentals – $90 for others
- For owners living on-site, they could offer up to nine guest rooms
- For owners not living on-site, they could rent an entire house (but not individual rooms) for up to 30 days at a time
- Rentals utilizing less than three guest rooms and rentals of the entire house would be allowed in all zoning districts other than industrial
- Rentals utilizing three to nine guest rooms would not be allowed in single-family residential zones
- All units would have to be equipped with smoke and carbon monoxide detectors
Short-Term Rental Interest Spurred by Last Year’s U.S. Open at Chambers Bay
Last year’s U.S. Open at Chambers Bay (University Place), the first U.S. Open ever to be played in the Pacific Northwest, served as a bit of an incubator that allowed some homeowners to test the market via Airbnb. The results were somewhat disappointing, mostly because many homeowners failed to price the accommodations appropriately. Nevertheless, those who rented and those who researched the necessary protocols came to see that there is considerable demand for short-term rentals. With the cost of hotel rooms in Tacoma and other areas rising, travelers are looking around for alternatives.
Legal Concerns for Homeowners
There are a number of legal issues that need to be considered if you choose to offer Airbnb-like services within your home. They include:
- Insurance concerns – In some cases, your homeowner’s insurance may not be responsible for losses associated with the short-term rentals. Acknowledging this issue, Airbnb has introduced its Host Protection Insurance program. Depending upon your insurer, however, the owner may be able to get a special rider explicitly extending coverage.
- Condominium or Homeowner Association rules – Many condominium and homeowners’ associations have special rules regarding the rental of condo units, or “business” use of a residence.
- Tax implications – Because home sharing via Internet apps is so new, the federal and state tax agencies have not had time to catch up with their own rules and regulations. For example, at what point does a homeowner renting to others cease to be a homeowner for purposes of deducting mortgage interest? Tax rules related to vacation rentals should be understood by homeowners, but they may not fully apply to the ultra-short term rental of your spare bedroom.
Forewarned is Forearmed, Expert Legal Counsel Important
Those seriously considering taking advantage of the Airbnb, short-term rental craze, should consult an experienced, knowledgeable business attorney. The peace of mind in knowing that your plan meets the local and statewide legal requirements is invaluable. Blado Kiger Bolan, P.S. has more than 30 years of combined experience providing both individuals and businesses with quality legal services throughout the Pacific Northwest. We have represented clients in all sorts of real estate matters, and we have the experience to advise you as to your rights. We pride ourselves in what we call, “Washington Law Made Easy.” We can design the simplest, most effective solution for your legal issue. Because of our firm’s extensive experience in business litigation, we are also better equipped than many law firms to help you avoid the expense of a court battle. For assistance with any real estate issue, contact us on the web, or call our office at 253-272-2997.