Wednesday, October 12, 2011

Legal Primer on Short Term Vacation Rentals

A good overview of legal issues around regulation of vacation rentals -- this white paper also discusses specific regulatory attempts in Michigan, Florida, California and Hawaii.  I have not been able to find out who wrote this White Paper.

There have been a series of reverse condemnation[1] cases...cases that were important enough to be front page news all across America and to spawn dozens of state Constitutional referenda to protect property rights. There are also, each year, dozens of high profile contests over property distributions and destruction, from wills to wildfires, through divorces and deaths. But there are few areas of emerging real property law more fraught with the potential for high-stakes loss than short-term vacation rental restrictions. After all, property ownership is (or has been) at the heart of the American dream.

The economic crisis of 2008 began with sub-prime property ownership losses, and the crisis of 2009 may well end with an onslaught of real estate as an investment tool. Particular concerns are being raised by government restrictions on an emerging industry, generically referred to as short-term vacation rentals, or “STVR.”

It is important to note the most common criticisms of short-term vacation rental (STVR) uses did not begin with any economic crisis, per se[2]. Accelerated by market challenges, undoubtedly, but more intractable issues have become the emergence of new legal doctrines, usually aimed at restricting, but sometimes allowing, a wider definition of “single family uses,” under state zoning laws. Unlike most complicated legal issues, however, vacation rentals rest firmly on generally simple uses of property by generally ordinary property owners. The case of Ogden Dunes is, itself, an example of the legal primer addressed in any rental investor’s interests in surviving what promises to be an era of challenge and change to personal property.


"(The Ogden Dunes) case represents virtually the entire range of issues likely to emerge in what can be characterized as unfair zoning enforcement….essentially, a calculation as to how American’s rights to use a second-home will look in the future." Page 2

"...economic analysis in Hawaii suggests that restrictions on STVR rentals send the business associated with those rentals to other jurisdictions...and the impact is significant." Page 6 

Read the entire White Paper here....

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