As summer ends and the cooler weather of fall arrives, Tripp Freeley yearned for the days of sun, sand and surf. So Tripp began planning his family’s vacation for next summer. A hotel would not work for Tripp, his wife and three young kids – they needed a house with multiple bedrooms. So Tripp went to an online short-term rental by owner website and reserved a house near the beach.
The next summer the family drove 7 hours from Dallas to the house. Shortly after they began getting situated there was a knock on the door. Tripp opened the door to find a local code compliance officer. The compliance officer told Tripp that the city made it illegal to rent the house, and they had 24 hours to vacate. Tripp is floored and mortified that his “perfect” family vacation is now ruined. Does the city have the right to ban property owners from renting their homes out on a short-term basis?
Cities’ Policies Banning Property Rentals
In Texas, home-rule municipalities possess the “full power of local self-government” provided those ordinances are not “inconsistent with the Constitution of the State, or of the general laws enacted by the Legislature of this State.” Many cities are now regulating short-term home rentals. These regulations vary so widely that a research organization actually graded 59 cities across the U.S. For example, Galveston permits short-term rentals in most zoning districts. Others, like Grapevine, completely ban short-term rentals.
With these ever-changing regulations the online rental platforms are unable to keep up – if they are even attempting to keep up at all. As Dan Gelber, Miami Beach mayor said earlier this year, “The easiest way to stop all of this is if the home-sharing platforms simply didn’t send people into these neighborhoods.” Which raises an interesting question: do online home-sharing platforms violate state consumer deceptive practices statutes when they offer consumers the ability to book rentals through their website when those rentals are illegal? Arguably they may. By offering the properties for rent, the websites are representing that the properties have characteristics – the legal ability to rent – that they do not have.
Can States provide a solution to this problem?
Yes, they could through legislation governing short-term rentals. But multiple efforts to tackle the short-term rental issue failed at the Texas Legislature during last year, despite Governor Abbott’s support for a “broad-based law” that would preempt local ordinances.
Ultimately the issue may be decided in the courts. Currently a lawsuit pending in the Austin Court of Appeals argues that Austin’s short-term rental ordinance is unconstitutional. The Texas Attorney General filed a brief supporting the homeowners’ position. Another case upheld a temporary injunction in favor of a homeowner that the rental ordinance violated property rights in certain instances.
Tilting the Scales in Your Favor
Before posting your property on a short-term rental website, check your local ordinances to confirm it is legal to do so. Failing to do so could result in substantial fines. And, if you are looking to rent a home for vacation, do your homework to make sure it is okay to rent before booking, otherwise your vacation may turn into the trip you want to forget.