Modern technologies present new opportunities for real estate owners to receive income by renting properties. There are many companies that are available for homeowners to rent their houses out to other individuals such as AirBnB, Craigslist, and HomeAway.com. These companies allow owners to advertise their houses, condominium units and other types of real estate property as available for impermanent use. However, before homeowners can do this, there are several legal issues that need to be considered. Some legal issues that could be involved are whether a property may be used as a rental, local governmental regulations, use restrictions in condominiums, subdivisions and planned communities, and other sources of legal requirements.
Most local government entities have the authority to enact laws to protect the public health, safety, morals, and welfare of their communities. This control is performed through the establishment of zoning ordinances that are meant to restrain certain areas of land to specific types of uses. Also, renting could also require compliance with certain building code standards and housing regulations. These requirements can vary from one local area to another. Residential communities often institute restrictions specifically targeted at rentals, such as a restriction in a condominium’s declaration prohibiting a unit from being used as an overnight bed and breakfast, but allow rental agreements over a year. Other communities’ might require an application and approval prior to renting.
The first action taken against a property owner who has violated a local ordinance will receive a demand to stop the violation or to come into compliance within a certain period of time. For violations of restrictions in governing documents, an association can seek a court order prohibiting the activity. Penalties for violating local zoning regulations and ordinances can be more severe. Other contracts may have terms that restrict or prohibit renting. Owners should review them and ensure renting a property does not by accident result in a liability breach, default or loss of insurance.
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