By: Ned Hale, Board Certified Real Estate Attorney
The metaphor “a bundle of rights” is often used to describe a real estate owner’s interest. These rights are meant to include the right to occupy, the right to improve, the right to sell, and the right to rent. Now, in the digital age and the rise of Airbnb and other short term residential rental sites, it is the last of those rights, the right to rent, that is generating the most controversy. Because that right to rent must be balanced with the rights of the owners of neighboring properties to be free of the noise, traffic, crowds, and parking problems that short term rentals often create.
This controversy does not, for the most part, include disagreements about Airbnb rentals in condominiums and some homeowner’s associations. Nearly all declarations of condominium and many HOA restrictive covenants contain some restrictions on how often a residential unit may be rented in a year (frequency) and the length of stay (duration). A property may be limited to, for example, no more than four rentals a year for periods not exceeding 30 days each. Florida courts have generally upheld such limitations. Since Airbnb focuses on short term and vacation rentals, such rules usually effectively prohibit Airbnb business entirely. Accordingly, regardless of whether you represent a buyer or seller, you should inquire with the Association to get a full understanding of any rental restrictions.
Where the fights arise are concerning properties that are not governed by any sort of condominium association or HOA. In 2011 the Florida legislature got into the ring and delivered a knock-out punch to local governments: F.S. 509.032(7)(b) is pretty clear and succinct. It says, in its entirety: “A local law, ordinance, or regulation may not prohibit vacation rentals or regulate the duration or frequency of rental of vacation rentals. This paragraph does not apply to any local law, ordinance, or regulation adopted on or before June 1, 2011.” This law was passed in direct response to criticisms of Airbnb. It says that municipalities and counties cannot enact rules or laws limiting the frequency or duration of Airbnb rentals but it grandfathers in local laws that were already in place on June 1, 2011. This statute is therefore very favorable to Airbnb and its users; by dictating that the only the state legislature–and not the hundreds of other governmental entities in the state—may regulate the duration or frequency of vacation rentals, the legislature has effectively said, “hands off this issue, little folks; only us big boys and girls at the state level are capable of regulating this one.” And what has the state done to regulate the issue? Thus far, essentially nothing, giving free reign to Airbnb to do business throughout the state.
Some cities and counties are cleverly getting around the statute by enacting regulations that are not technically restrictions on frequency or duration of rentals. Fort Lauderdale, for example, decided to make Airbnb rentals a red tape hassle: rentals that are not timeshares have to be registered with the city and pass a maintenance and safety inspection. Other governmental entities are curbing short term rentals by enacting regulations on noise, the number of overnight guests, trash removal and parking. The statute does not prohibit cities and counties from regulating those issues. So again, regardless of whom you represent, you should always check with the municipality and the county to inquire if there are any local regulations affecting short term rentals.
One thing that Airbnb property owners cannot avoid is occupancy taxes. The state collects a six percent tax on rentals of less than six months, and counties may levy an additional tax. Generally, those taxes are collected by Airbnb and passed on to the Airbnb guest, but ultimately it is the owner’s responsibility to make sure the taxes are properly remitted.
F.S. 509.032(7)(b) will not be the last word in the Airbnb saga. The legislature, the local governments, and the courts will continue to weigh in on all of this. The bell has not yet rung on this match.
Ned Hale is the owner of Hale Law Services, P.A., which is based in Estero.