Real Estate Q & A: Cities cannot stop homeowners’ short-term vacation rentals

Adam D. Martinez | Chairman of Real Estate Litigation Department

Question:  I recently purchased a beautiful vacation home in Sedona, Arizona. My family and I stayed at the home for a couple of weeks during the holidays and I was able to meet some of the other homeowners in the neighborhood. During one visit with a neighbor, I explained that I planned to offset some of my yearly expenses for the home by renting it out on VRBO or AirBNB when my family is not using the home. The neighbor was extremely offended that I would do that and insisted that I cannot legally rent my home for less than 30 days under the laws of Sedona. I did not know of this restriction. Is it true?

Answer:  No. The Town of Sedona, or any other city, town, or county in Arizona generally cannot prohibit an owner from entering into short-term rental agreements for their homes (rental agreements of less than 30 days). On December 31, 2016, SB1350, signed last year by Governor Ducey (now known as A.R.S. § 11-269.17 and A.R.S. § 9-500.39), prevents municipalities from restricting leases of less than 30 days. Therefore, your neighbor is incorrect even though they may have been correct at the time you purchased your home.

While the new law applies to all cities, towns, and counties, it does not apply to condominium or homeowner’s associations (HOAs). In other words, HOAs can still prohibit short-term vacation rental agreements. However, HOAs can only restrict short-terms rental agreements if their CC&Rs clearly and specifically state a restriction. Otherwise, short term-rentals will be permitted.

Adam Martinez is the Chairman of the Real Estate Litigation Department at Rose Law Group pc., and can be reached at amartinez@roselawgroup.com.

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