BY: ATTORNEY MICHAEL MILLMAN
Over the last several years, there has been a great deal of discussion and notoriety about people making their homes available for short-term vacation rentals and possible home sharing situations. Originally conceived in San Francisco, Airbnb became incredibly popular. First, visiting university professors would make their homes available for short-term rentals whlle they were on sabbaticals or traveling to another university as a “guest professor.” In time, these vacation rental platforms became more popular than conventional motels and hotels. Home away became even more popular.
How does it work?
You may have extra rooms in your house, and your residence is within walking distance of the beach, Beverly Hills or Hollywood. Travellers to your city, may want to arrange to rent a room from you, rather than spend $500 per night in a hotel.
Again, this is the “new economy”. Uber and Lyft have revolutionized ground transportation and taxi service.
The high-powered vacation rental platforms began to dominate traditional vacation rentals because they are convenient, efficient and incredibly inexpensive. Naturally, municipalities began to receive complaints.
The complaints include points that the Airbnbs unfairly compete with hotels and motels. They claim the vacation rentals are not paying the “transient occupant tax” which sometimes can range as high as 16% per night and that the people staffing these rentals are not being paid living wages. In many instances, some of the rentals were turned into “party houses“ causing inconvenience and problems for neighbors.
Some municipalities attempted to prevent these practices, and extensive litigation ensued.
Finally, on May 12, 2015, the Santa Monica City Council adopted the “Home-Sharing ordinance” to regulate vacation rentals, and to promote sanctions on short-term time-sharing arrangements.
Those who are interested should access www.smgov.net/homeshare.
The following is a summary. Santa Monica sanctions short- term rentals, provided you apply for a business license and you abide by their rules. The rule is simple: guests enjoy a non-exclusive, shared use of the rental unit, and at least one person who is permanently domiciled in the unit must be present. This does not apply to apartments where the rental agreement or lease prohibits assignment, subletting or short-term rental arrangements.
However, if you have an accessory dwelling unit or a garage conversion on your property, known as a “granny flat” and it was built before March 31, 2017, it may be offered as a rental.
In Santa Monica, there is no limit as to the number of days you can allocate the unit for short-term rentals. However, under no circumstances, can the rental exceed 30 days.
Under this new ordinance, the rental arrangement can be undertaken in any zoning. Apparently, you do not need a police permit, nor do you need to have additional parking. Again, you do need a residential rental business license which costs approximately $75 per year, and also includes a certain percentage of your income. The transient occupancy tax is applicable for ALL rentals of less than 30 days.
For those considering Santa Monica’s home-sharing ordinances, commencing at Municipal Code Section 6.20, you should carefully examine the section and meet with a local attorney who specializes in the home-sharing ordinance, its implementation and enforcement.
In conclusion, home sharing was designed essentially to allow seniors who are burdened with mortgages and other financial obligations to ”age in place” in their own home with the help of additional revenue. Be aware that tenants can manipulate the system if the landlord has not provided a strong lease prohibiting the practice.