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A Growing Issue: Proliferation of Online Sites Such as HomeAway and AirBNB Creating New Concerns About Seasonal Weekly Rentals of Residences

I was on Cape last weekend and noticed a number of properties advertising that they were available for weekly rentals and still had weeks available for this summer. While many homeowners have long rented their vacation homes on a weekly basis to vacationers on the Cape (using traditional channels such as local real estate agents), the practice has been gaining attraction of late due to the proliferation of websites such as HomeAway, VRBO (Vacation Rental By Owner), AirBNB (allowing for the rental of entire properties or single rooms located therein), and WeNeedaVacation.com, a site that specializes in Cape Cod vacation rentals. The expansion of the practice has, not surprisingly, led to a number of issues in both single-family neighborhoods and community associations. Proposed legislation and recent case law in the Commonwealth indicate that short-term rentals constitute an issue of primary importance in real estate.

Proposed legislation and recent case law in the Commonwealth indicate that short-term rentals constitute an issue of primary importance in real estate.

While the seasonal weekly rental of single-family residences has been a common practice in vacation destinations, such as the Cape or along the South Shore, a recent decision of the Land Court may at least cause pause as to the legality of such practice in certain communities. In Lytle v. Swiec, No. 13 MISC 480974 (KFS), 2017 WL 2257702 (Mass. Land Ct. May 23, 2017), the Land Court upheld the determination of the Zoning Board of Appeals of the Town of Hull in finding that the seasonal weekly rental of a single-family dwelling unit constitutes a violation of the town’s zoning bylaw. In that matter, a property owner purchased a grandfathered duplex, which consisted of two single-family dwelling units. The property owner resided in one of the units and rented the second unit for seasonal weekly use, continuing the practice of a previous owner. The property owner would enter rental agreements with those using the property, but did not obtain any type of permit authorizing use of the property as a bed and breakfast, hotel, motel, guest house or the like.

At some point, the Hull Building Commissioner received complaints about the property owner’s rental of the unit. The Building Commissioner issued a violation notice to the property owner, determining that the “transient rental” use of the property constituted a violation of the town’s zoning bylaw, which provides that any use not specifically authorized in the zoning bylaw is deemed prohibited. On appeal, the Zoning Board of Appeals affirmed the Building Commissioner’s decision, determining that the property owner’s use was not specifically allowed under the town’s zoning bylaw, is inconsistent with single-family use, and was not otherwise allowed as an accessory use. The property owner took further appeal to the Land Court, which upheld the Zoning Board of Appeals’ decision. While the Court was careful to note that its determination was limited “to this particular property, without considering the still-heavily disputed allegations as to the custom and practice throughout Hull,” the Court upheld the Zoning Board of Appeals’ determination that the property owner “is essentially operating a commercial enterprise in a single-family residential zone.” The Land Court’s decision notes as follows: “The issues remaining in this case are indicative of the tensions in Hull and other municipalities between property owners utilizing shared hotel and accommodation applications, such as Airbnb, HomeAway, or, in this particular case, VRBO, and their neighbors, town, zoning boards, and others concerned with short-term rentals in residential zoning districts.”

While the Land Court took care to point out that its determination concerned only the particular property and the uses permitted (or, as in this instance, unpermitted) under the town’s zoning bylaw, the case certainly should put property owners on notice of potential issues that they may run into in seeking to rent their homes (or second homes) for seasonal weekly purposes. Although each municipality and property presents unique circumstances, this case includes at least one analysis concluding that such short-term rentals may be inconsistent with single-family residential uses authorized under a zoning bylaw. If you intend to rent your property on a seasonal or weekly basis, we would encourage our clients to gain an understanding as to how the municipality’s zoning bylaws have been enforced with respect to seasonal rentals and advise review of the local bylaw to verify compliance therewith.

In addition, and not discussed herein, a slew of other zoning issues may be implicated, such as lodging concerns when a property owner advertises only one room for sale through AirBNB. To be sure, municipalities will approach the issue of short-term rentals differently, and many cities and towns appear to be reviewing their regulations given the rise in online tools that make such short-term rentals more accessible.

In addition to the recent Land Court decision, the issue of short-term rentals is also presently before the Legislature, with various legislation proposed that seek to impose regulations and taxation upon short-term rentals. The legislative proposals, including Governor Charlie Baker’s proposed fiscal 2018 budget, focus on taxation, with proposal to treat certain short-term rentals through online sites similar to hotels and motels. Notably, under the Baker proposal, not all rentals would be covered; to be subject to the occupancy tax, the property would need to meet certain criteria, such as provision of short-term rental accommodations for 150 or more days in the preceding year. Another proposal currently before the Legislature was introduced by Sarah K. Peake of Provincetown and seeks to allow municipalities to authorize the imposition of local excise taxes on vacation rentals of houses, apartments, cottages or condominiums. While the Legislature is in the first year of its two-year session, initiatives relating to short-term rentals appear to be a “hot topic” and may impact property owners who desire to avail themselves of weekly seasonal rentals.

Kimberly Bielan Condo Law Blog

Our office will continue to keep you apprised of legal updates concerning short-term rentals, including decisional case law and legislative updates. Should you have any questions, please do not hesitate to contact Kimberly Bielan at 781-817-4607 or kbielan@lawmtm.com.

Kimberly Bielan