Please tell me about "licensed" vacation rentals in California? Is it necessary to get a license if you want to buy a property to rent out?

Asked by Annette, Austin, TX Wed Jun 29, 2011

Does this have to do with taxes?

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13
Jim & Jeri L…, Agent, Avila Beach, CA
Fri May 31, 2013
Jim & Jeri LaMarca, Broker, 93424
Thank you for your interest in our California Central Coast, here you go!
New Pismo Beach Vacation Rental Ordinance
In February, the Pismo City County approved a new ordinance regarding vacation rentals.
Here are some of the requirements to operate a vacation rental.
- There has to be someone that lives within 25 miles of the rental that is available 24 hours a day to deal with complaints regarding the vacation rental. This person must respond within 3 hours after contact has been made.
- The vacation rental owner needs to notify owners and residents of any property within 100 feet of the vacation rental that they are using the property as a vacation rental and the phone number of the local contact person.
- Any advertising of the vacation rental needs to include the Pismo Beach vacation permit number in the advertisement.
- The permit is considered to be personal property so it does not go with home if the property is sold.
We hope this helps! Jim & Jeri LaMarca Mid-Coast Realty http://www.SanLuisBay.com
805.542.9774
0 votes
Leila Harrin…, Agent, Paso Robles, CA
Fri Aug 19, 2011
Some cities do not allow vacation rentals without a license from them (example-Cambria), other cities do not have ordinances restricting vacation rental (example-Paso Robles). You would need to check with the specific city in which you are looking to purchase property. Your Realtor should know the details. There are also vacation rental companies that can handle all the details for you. It has nothing to do with taxes. Good luck!
0 votes
Michael Byrd, Agent, Arroyo Grande, CA
Thu Jun 30, 2011
Be careful. Running a vacation rental is akin to renting out a hotel room. You're not transferring anything, just renting out the place for a week. Please consult whatever ordinance governs the locality you're considering.

There are other options depending upon your ultimate goals, though. A lease such as David mentioned is generally for a year and does, indeed, provide a leasehold interest to the tenant for the term of the lease. A month-to-month rental agreement provides you with a little more flexibility as it can be cancelled with a 30-day notice. There's also a model sometimes used that is sort of a vacation rental/month-to-month hybrid which caters to temporary tenants seeking furnished domiciles for a period in excess of 30 days. Visiting nurses temporarily filling in at a local hospital are examples of the market for such rentals. If the terms exceed 30 days it generally would not be considered a vacation rental, but the term may be limited. This would potentially provide some use by the owner subject to advice from your tax adviser.
0 votes
David Norwood, Agent, ARROYO GRANDE, CA
Thu Jun 30, 2011
When you rent out a home you normally have a lease. When the lease agreement is executed, you are temporarily transferring your property to the renter. The tenant now has a leasehold interest in the property for the amount of time the lease is for; claim or right to enjoy the exclusive possession and use of an asset or property for a stated definite period. For that time period the renter owns the property. Therefore, there is no reason for the owner of record to have a business license to lease the property. If you have any other questions about renting properties, please feel free to contact me at 805-471-0828 or David@DNorwood.com
Web Reference:  http://dnorwood.com
0 votes
Hi David. I have a question. We have a home at Cayucos that we would like to rent out. We were told by the assessment dept. that another house behind us has a business license and is too close to ours. We had a license years ago, but let it expire when my sister's kids used it for college residence. Is there a way to get on a list? Is the only option renting monthly? I would you appreciate any way you could help us.
Flag Sat Jul 21, 2012
John Arendsen, Agent, Leucadia, CA
Wed Jun 29, 2011
Ah, Cayucos!! My favorite surf beach town next to Leucadia. Love the surf too.
0 votes
Catherine St…, Agent, Cayucos, CA
Wed Jun 29, 2011
It will depend on the location of the property and how long your want to rent out. Many areas require a vacation rental license and there are varying rules and regulations throughout the State. You should check each county governing rules and regulations regarding vacation rentals.
If you are purchasing a property and choose to rent it out on a monthly basis, say for 3 - 6 months to one tenant, then you may not be subject to the same rules.
Again, it is important to check each area of the State to be sure you are complying with the rules and regulations.
Hope this information helps. If you would like to discuss anything further please do not hesitate to let me know.
Thank you.
Catherine, Owner/Broker
Catherine Stone Real Estate
805-234-4509
0 votes
Lance King, Agent, San Francisco, CA
Wed Jun 29, 2011
Sounds like Jim & Jeri are knowledgeable about local regulations. Many cities and counties have regulations about this as a means of controlling impact on facilities and/or generating revenue. Make sure you know what you're getting into before you proceed with this.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes
Michael Byrd, Agent, Arroyo Grande, CA
Wed Jun 29, 2011
Actually, it has less to do with taxes and more to do with maintaining order to prevent disruptions within residential neighborhoods. If you look at the county's ordinance, for example, you'll note that the key provisions are designed to limit the number of vacation rentals in neighborhoods, limit the number of occupants and vehicles and make sure their is a local contact responsible for keeping things quiet and orderly.
0 votes
Michael Byrd, Agent, Arroyo Grande, CA
Wed Jun 29, 2011
As noted, vacation rentals are regulated by local jurisdictions in California. In addition to the City of Pismo Beach ordinance previously provided, you might also want to consider the county's ordinance which governs the unincorporated coastal towns.

The bottom line is, it can be expensive and extremely difficult to license new vacation rentals in some areas so one already established might be your best alternative.
0 votes
Jim & Jeri L…, Agent, Avila Beach, CA
Wed Jun 29, 2011
Thank you for your interest in our California Central Coast, here you go!
New Pismo Beach Vacation Rental Ordinance
In February, the Pismo City County approved a new ordinance regarding vacation rentals.
Here are some of the requirements to operate a vacation rental.
- There has to be someone that lives within 25 miles of the rental that is available 24 hours a day to deal with complaints regarding the vacation rental. This person must respond within 3 hours after contact has been made.
- The vacation rental owner needs to notify owners and residents of any property within 100 feet of the vacation rental that they are using the property as a vacation rental and the phone number of the local contact person.
- Any advertising of the vacation rental needs to include the Pismo Beach vacation permit number in the advertisement.
- The permit is considered to be personal property so it does not go with home if the property is sold.
We hope this helps! Jim & Jeri LaMarca Mid-Coast Realty Pismo Beach CA
0 votes
Gerard Carney, Agent, Spring Hill, FL
Wed Jun 29, 2011
Licensing is required in many places since you are basically a hotel rental of sorts and as such they want you to abide by those tax structures and not normal rental practice!
0 votes
John Arendsen, Agent, Leucadia, CA
Wed Jun 29, 2011
I know that in the beach cities around my neighborhood there are some license requirements in order to control the amount of vacation rentals in certain residential and high density areas. However, I don't think everyone obtains them. It's pretty close to impossible to monitor. But if your city does require them it would be in your best interest to get one or run the risk of steep fines and/or penalties which could possibly nullify any profits you may realize.
0 votes
John Souerbry, Agent, Fairfield, CA
Wed Jun 29, 2011
It's up to the city where the property is located. Some require a business license, most don't. If you're going to hire a local property manager to book guests and maintain the property, they can advise you in all the local regulations.
0 votes
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