Short-term Home Rentals: What You Need to Know

Home-sharing websites like Airbnb and HomeAway give property owners a way to make money from rentals, without the concerns of being a full-time landlord. In 2016, Maryland Airbnb hosts earned $25.3 million in rental income, so it seems likely that more people will want to open their homes to short-term renters. However, there are some issues homeowners should know about before listing their property on a home-sharing website.

Regulatory Concerns

The Montgomery County Council held a public hearing September 11, 2017 about proposed changes in regulations and licensing for owners of home-sharing properties. Technically, home-sharing is illegal in the county under existing zoning laws, but the county hasn’t enforced those laws.

Earlier this year, the council revealed its final proposal that would make home-sharing rentals legal:

  • For up to 30 days at a time
  • For no more than 90 total days in a year
  • If the property owner obtains a license from the county (which must be renewed each year).

At issue is the fact that the county currently receives no tax revenue on home-sharing rentals, as it does from hotels and bed-and-breakfasts. The new regulations, if enacted, would funnel more money to the county, and the annual 90-day limit on home-sharing rentals would preserve the integrity of residential areas.

Insurance Considerations

The National Association of Insurance Commissioners offers some cautionary advice for people who want to enter the short-term rental market. Typical homeowners insurance policies are unlikely to cover accidents and injuries that occur during short-term rentals, which could expose the property owner to the risk of being sued. Airbnb does offer $1 million in liability coverage for third-party bodily injury and property damage, but that insurance does not cover medical costs or personal liability.

In addition to regular homeowners insurance, people who own short-term rentals may also need a landlord policy, to ensure any damages are covered. Additionally, NAIC says some property owners prefer to rent only to people who can prove they have their own homeowners, renters, or personal liability insurance.

Homeowners wishing to list property on a home-sharing website should talk to their insurance agent first, to make sure they are fully covered for any event that could happen on their property.

Neighborhood Covenants

Depending on where you live, you could be subject to additional home-sharing rules. Homeowners Agreements (HOAs) may prohibit home-sharing or restrict it in some way. And municipalities may have different home-sharing laws, too.

Violating a local ordinance or an HOA clause could be a costly mistake. So, in addition to talking to your insurance agent, you should consult an attorney with experience in landlord law, to make sure you’ll be in compliance with laws and regulations in your area.

Lusk Law, LLC, specializes in assisting landlords, helping to avoid litigation when possible, and we’re ready to actively represent our clients in court when litigation is necessary. Our experienced attorneys have provided legal counsel and representation to landlords in Frederick County, Howard County, Baltimore County, Baltimore City, Carroll County, Washington County, Anne Arundel County, Montgomery County and other counties in Maryland. If you’re interested in home-sharing, please call us at 443-535-9715 or fill out our contact form to schedule your legal consultation.

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