With the gaining popularity of sites like Airbnb and VRBO, municipalities nationwide are beginning to look more closely at how to regulate the short term rental of rooms or entire homes by individuals. After a lengthy public hearing, the Boulder City Council recently voted 7-1 to move on a proposal that restricts short-term rentals to people’s principal residences and requires that they live in those residences at least 275 days a year.  During testimony councilpersons made it clear they are looking for a solution that allows flexibility for people renting their homes but also provides more long term housing solutions for the community.

Last year, San Francisco tackled the Airbnb conundrum with its own law, which is already being amended after only 5 months.  Many cities’ first stabs at addressing the issue relate to taxation only.  They require that anyone who rents their home or a room in their home for less than a specified number of days (e.g., 10 or 30 days) must be taxed on the rental rate, just like hotel rooms are taxed.  This shows how challenging the issue can be.

Associations who want to address these types of rentals within their communities should look first to existing declaration provisions, which often address length and scope of rentals. In addition, existing restrictions allowing “residential use” only may or may not be helpful in addressing the problem.  While Colorado courts have not addressed the issues, other states have with differing opinions. Therefore, we recommend you consult with an experienced attorney in advance of taking any action against owners who are renting or swapping their homes on a short term basis.