Vacation Rentals go by many different names, such as VRBO's, Airbnb's, STLU's, and many more.
To clarify, a Short Term Vacation Rental is the rental of an entire private residence for a period of less than 30 days.
Hosted Rentals (often called Airbnb's because this was the original Airbnb model) are when a host rents out a single room or sleeping area within a single family dwelling where the property owner remains in the residence.
The answer to this will depend on the City you are looking to operate in. Some Cities welcome vacation rentals and some Cities vehemently oppose vacation rentals. There are a lot of Cities up and down the California Coast that are figuring out the best way to work with vacation rentals and that is why it is so important to get involved to ensure that these Cities create fair ordinances in regulating vacation rentals to protect the practice as well as protect the neighbors and neighborhoods they reside in.
There is much debate about this topic in CA right now (as well as other area's of the world) so, what have the courts said?
What’s a “Residential Use?”
A Kentucky appeals court ruled recently (in Vonderhair v. Lakeside Place HOA) that short-term rentals violated the residential use restrictions in a homeowner association’s covenants. The owners renting their property argued that the declaration specifically allowed rentals, without any restriction on the duration of the tenancy. The owners also argued that renters used the property in the same way as full-time residents – for residential purposes – just for shorter periods. Accepting income for the property, they contended, did not alter its residential use.
The Appeals Court disagreed. The issue, the court said, was not how the tenants used the property, but how the owners used it. And in this court’s view, the short term rentals made the property’s use consistent with that of a hotel or a motel, not a single-family residence.
Considering the same question, the state Supreme Court in Washington State reached the opposite conclusion. In this case (Wilkinson v. Chiwawa Communities Association,) a homeowner association seeking to enforce a one-month minimum rental period argued that shorter-term rentals constituted a commercial use of the land, prohibited by the association’s covenants; and that renting to unrelated individuals also violated the association’s single-family use requirement.
Turning the Kentucky decision on its head, the Washington court said the deciding factor was how the tenants were using the property – in the opinion of this court, for eating, sleeping and other “residential” purposes. The fact that owners accepted rental income and paid business and occupancy taxes for the property, the court said, did not change its residential character.
While the contrary reasoning of the Kentucky court would be more helpful to community associations looking to bar short-term rentals, that decision was something of an outlier; the courts in most jurisdictions would likely agree that the short-term rental of a residential property to guests who simply sleep and eat there is still a residential use.
Zoning laws also aren’t likely to be much help, partly because most didn’t anticipate that homeowners would be renting their homes, or rooms in their homes, to travelers; and also because while communities may move to regulate this activity, it appears that they are unlikely to prohibit it. That, at least, has been the prevailing pattern so far in cities and towns (San Francisco and Portland, Oregon among them) that have addressed the issue. So community associations concerned about short-term rentals are probably going to have to rely on their own authority to regulate or ban them.