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R Mark Bertocci's Blog

By R Mark Bertocci | Broker in Miami Beach, FL

Laws, Rules investors and brokers should know about Short Term Renting

With the rising popularity of websites such as Airbnb, FlipKey, and HomeAway, short-term, hotel-styled renting of private homes is all of the rage throughout South Florida vacation destination cities.  A keyword search on AirBnB using South Beach for example resulted in over 1,000 rental postings.  

 

Short-term renting can potentially yield a better income stream for an owner than the normal year-long leasing.  And for some owners, short-term renting can provide the ideal flexibility to visit and enjoy their own furnished getaway homes—much more so than typical yearly tenancies.  

 

Because of these distinct advantages, Realtors serving vacation communities may be tempted to promote their listings based on a short-term renting model.  This article discusses some of the legal considerations behind short-term renting and what every BUYER should know about short term renting.    

 

    Check the association documents:   If you’re client is considering purchasing a home in an association, such as a condominium, the first step in learning if short-term renting is possible is by checking the association by-laws and rules and regulations.  These “CONDO DOCS” can be found even if you are not under contract: A little secret Realtors may not know is that in many Counties throughout Florida, recorded association documents can be found online---either on the County Clerk or the County Recorder’s website.  Finding documents is as easy as key word searching the association’s name in the appropriate county website.   In Miami-Dade County, declarations and by-laws can be found on the Recorder’s Office and can be downloaded for free. 

 

    Perhaps not surprising is that most associations do not allow for short-term renting.  If they do, the shortest periods are likely to be in terms of months and not daily or weekly stints which characterize current short-term renting typically promoted on AirBnB.  Owners may undertake short-term renting in conflict with the association rules—either out of ignorance, misinformation by Realtors or purposeful disregard.   However, these owners risk being cited by their association or worse the local municipality. 

   

    Research your local ordinances:    It is not enough to know that the condominium documents have short-term renting available.  The next step is to research the local ordinances to check if short term renting is restricted or otherwise regulated in the type of zone the subject property is located. 

 

By way of example, the City of Miami Beach defines short-term renting as a rental having a term less six-months and 1 day.   Short-term rentals are allowed in high-rise and hotel zones but not allowed in single-family zones or the interior residential areas of South Beach (i.e. the Flamingo Park area).  In order for an individual condo owner to be able to rent on a short term basis, they must first obtain from the City an appropriate Certificate of Use and Business Tax Receipt.   To qualify, the owner’s building will have to be in an eligible zoned district and must have been designed or modified with appropriate life-safety codes similar to those of hotels.  The City also must see proof that the association approves of short-term renting.  No unit may be rented more frequently than once every seven days and if allowed, only the entire apartment may be rented (i.e. no boarding).   Finally, owners who rent-short term must pay resort taxes.    [See City of Miami Beach City Code, Sec. 142-1111]

 

Enforcement and Realtor Liability Matters:    Enforcement of association and/or municipal restrictions on short-term renting usually begins by a neighbor’s complaint.  With a large number of guests coming though the door, it’s hard to predict whether a given short-term renter will be the cause of such a complaint.  After all, ‘short-termers’ are on vacation and don’t likely keep the same schedule as the ‘nine-to-fiver’ down the hall. 

 

Violations of association rules could result in a citation and a cease and desist letter being sent to the violating owner by the board.  If the owner persists in violating the rental rules, the association could take legal action.  Relatedly, most association by-laws provide for the loser in a lawsuit to pay the winner’s attorney fees and court costs. 

 

Violations of governmental ordinances may be even more punitive.  Persons found to be in violation the City of Miami Beach’s short-term renting ordinance can be fined $500 for their first violation.  For the second violation within the preceding 12 months the fine is $1,500.  The third is $5,000 and the fourth violation within 12 months is $7,500.  In a nutshell, it’s possible to rack-up a large sum of fines if an owner chooses to ignore the short-term renting ordinance.

 

Given the possible stakes at risk, ‘everyone is doing it’ is not solid legal footing.  Even if it seems everyone is short-term renting in an association, boards change over time.  What is allowed in practice this year could be prohibited next year.  You never know if a group of fed-up neighbors are hard at work, behind the scenes creating stricter enforcement of rules to prevent short-term renting or which guest is going to cause a neighbor to call code enforcement.   

 

All it can take is one citation by the board or municipality to make the owner change his rental strategy to be compliant with the association and/or municipal ordinance.   And if you, the Realtor, advertised that short-term renting is possible, it’s you the owner may blame when they realize they are not allowed to rent short-term.  

 

Misleading Advertising (FS 817.41):  Realtors who in their sales literature or listings promise investors high rates of return based on short term renting, when such renting is prohibited, risk violating Florida Statute 817.41 which prohibits misleading advertising.  

 

Misleading advertising includes written or printed form which are known, or through the exercise of reasonable care or investigation could or might have been ascertained to be untrue or misleading and which were made with the intent, even indirectly, of selling or disposing of real or personal property to induce the public to enter into buying such property.  

 

A plaintiff in a civil suit claiming a violation of FS 817.41 must show that the misleading advertising was the “proximate cause” of a financial injury or damage and that he relied on it when making the purchase.    Case law is well settled that exculpatory clauses in follow-up contracts do not preclude successful action for damages so long as the upfront advertising was misleading. 

 

The old phrase ‘ignorance of the law is no excuse’ is as applicable as ever to Realtors since we are held to a higher standard of care and knowledge being licensed professionals. 

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