The market for short term rentals is growing and opportunities abound, especially in Colorado. While services such as AirBnB and VRBO facilitate the marketing, communication, scheduling, and payment aspects of such rentals, it is imperative that property owners familiarize themselves with the legal aspects of participating in this market.
The first question a homeowner will need to address is whether the local government has acted in this area. There is no statewide scheme of regulation in Colorado. Counties, cities, and smaller municipalities may have adopted regulations or ordinances which affect a homeowner’s ability to rent a property for short terms. Generally, short-term rentals are considered 30 days or fewer. For many municipalities in the metropolitan area, their regulations and ordinances are described somewhere on the local government website. Check the Planning and Zoning or “Doing Business In…” pages. The Colorado Municipal League maintains a matrix of short-term rental property ordinances, as well, which is available online.
Common restrictions on short-term rentals include requiring the property to be the owner’s primary residence, carrying appropriate insurance, satisfying a building and safety inspection, and registering for taxation. Of course, it is important to be and remain in compliance with otherwise applicable laws and regulations, even if not directly related to the short-term rentals. You must make sure that your property is not in violation of any zoning limitation and that you are not behind on your property taxes. For mountain properties, especially, be sure that you have established and are maintaining appropriate defensible space.
The consequences of failing to comply with the pertinent regulations range from the mildly inconvenient to the financially ruinous. It is one thing to be required to install a smoke and CO detector in every bedroom; it is another thing entirely to face ongoing $100/day fines after discovering that your newly-purchased short-term rental investment property is situated on a too-small lot and ineligible for rezoning.
Before making the leap into short-term renting, it is important that property owners, and even renters, contact a knowledgeable real estate attorney to advise them and assist in the process. You can find exactly those attorneys at Coaty Marchant Woods, P.C. Give us a call today if you are considering getting into this market.