February 1, 2019

Short–Term Rentals: What Could Go Wrong?

by Ryan Aiello, Dinsmore & Shohl LLP

Three, two, one… game over!

It’s Saturday night, and your beloved Buckeyes just put the finishing touches on a big victory in the ‘Shoe. It was your first time sitting in the lower deck, which you had no problem springing for, as you’ve collected some extra cash by renting out the other side of your duplex for the night. You’re on your way home, ready to settle in for the night and bask in the glory of your big victory. As you pull up, you notice some commotion on your street: some people, gathering in front of your house. And as you get closer, it reveals itself: the warm glow of your loveseat, ablaze, in your front yard. Have fun basking in that!

And you thought this was easy money.

Short-term rentals have become all the rage for renters and property owners alike. Online platforms such as Airbnb and VRBO offer a compelling alternative to travelers who, for any number of reasons, are looking for something other than a traditional hotel experience. Property owners in desirable locations now have the means to open their properties to the online world and the flexibility to profit from their investments in a variety of new ways.

And there’s no reason why YOU, as a property owner, can’t take advantage of the opportunity - should you so choose. However, in order to avoid and/or minimize the cost of the couch-turned-bonfire scenario and other potential legal pitfalls, you should ask yourself, or your trusted legal advisor, a few questions:

Where do you live and what does your local zoning code say about short-term rentals?

Do you live in a planned community or condominium building where deed restrictions or other rules and regulations govern what you can and can’t do with your property?

What does your insurance policy say regarding renters? Is damage caused by renters covered? What if a guest gets hurt on your property?

Do your loan documents prohibit you from renting your property?

Are you familiar with the terms of service for your selected rental platform?

Have you carefully considered and provided your guests with “house rules” regarding the use of your property? What if your guests break the rules? What can you do and what rights do they have?

Have you talked to other short-term property owners about their experiences? For example, what is the process for keeping a security deposit?

These are just a few questions related to the legal considerations of a short-term rental. If you fail to carefully contemplate all of this and more, and plan accordingly, all of that extra Airbnb money… or your couch… could end up in flames.