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The Oversharing Economy: Short-Term Rentals Gone Wild

The growth of the “sharing economy” in recent years, which involves peer-to-peer transactions to share use of otherwise idle assets, has brought about numerous societal benefits (i.e., ride sharing, renting designer clothes, etc.).  However, in the case of short-term vacation rentals, it has also brought about a significant amount of consternation and push back. 

The regulation of these rentals in Arizona neighborhoods has become an increasingly contentious issue. While they provide travelers with a convenient place to stay during trips and owners with an opportunity to take advantage of a lucrative revenue stream, significant problems can arise when owners fail to police their guests (and guests fail to police themselves).  The greatest risk is often the one posed to the surrounding neighbors’ quiet use and enjoyment of their homes.  For unhappy neighbors bearing the brunt of unruly short-term rental guests, the aggravations can include:

  • Increased vehicle (including ride sharing services and parking) and pedestrian traffic and congestion
  • Noise from guests, including music, their vehicles, etc.
  • Public intoxication and indecent exposure
  • Trespassing, including by intoxicated short-term rental guests
  • Sanitation difficulties (i.e., trash build up, errant bottles and cans, drug paraphernalia, human and animal waste, etc.)

This article by attorney Grant Frazier provides an overview of some of the administrative and litigation strategies that may help you and your neighbors take back your neighborhood.


City-Specific Approaches.

Unfortunately for many homeowners, it is not easy to shut down a noisy short-term rental.  These disputes are relatively novel, and each matter is fact and city-specific, and so there is no definitive procedure or formula for success.  As an initial matter, A.R.S. § 9-500.39(A) states “A city or town may not prohibit vacation rentals or short-term rentals" and limits local restrictions on these rentals to those allowed under A.R.S. § 9-500.39(B).

Cities have utilized the leeway provided by A.R.S. § 9-500.39(B).  For example, the City of Phoenix enacted the Short-Term Vacation Rental Ordinance, which requires short-term rental hosts to register their property rental with the city—including provision of the owner’s emergency and complaint contact information—in order to be legally permitted to rent the property.  Violating parties may be found guilty of a Class 1 Misdemeanor and/or assessed monetary penalties ($500 for the first offense; $1,000 for the second offense within a 12 month period; $1,500 for the third offense within a 12 month period).  The City of Phoenix has also enacted the Loud Party Ordinance, which addresses loud party noise issues in general, but which was passed with a specific focus on regulating short-term vacation rentals.  The ordinance empowers police officers responding to loud house parties to impose upon the person responsible for the party the costs of the police’s response, with the cap on imposed costs ranging from $1,000–$2,000 per response depending on the number of times a responsible party has been cited in the preceding 12 months.

Local regulation is restricted in its effect, and has caused state legislators and many Arizona mayors to support HB2481, which is currently making its way through the Arizona Legislature. If passed, HB2481 would provide local governments the flexibility to establish limits on the number of people in short-term rentals, zoning restrictions limiting the number of rentals in any one neighborhood, and other tailored regulations to protect residential neighborhoods while still allowing for short-term rentals.


Pre-Litigation.

The following options remain open to unhappy neighbors faced with an unruly short-term rental property:

  • Speak with the short-term rental property owner about the issues with the property.  In the event the owner was unaware of the problem (i.e., they are out of town/state), he/she may take meaningful steps to remedy the problem.
  • Call the police every time the guests of the rental party house create a nuisance (i.e., anything which is injurious to health, or is indecent, or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property).
  • Document the offending activity by taking detailed notes, audio records, and the like—especially for instances when the police are called.
  • Work with your other neighbors to implement the above steps.  If the issue cannot be solved amicably and it turns into litigation, having multiple neighbors committed to the cause will improve the strength of the case and spread the legal fees across several households.
  • Write to and call your city to inform them of the situation and demand that they enforce city ordinances, including zoning restrictions, noise ordinances, and the like.  In doing this, it is critical to be respectful to the city staff, as you want the staff to be on your side.
  • Research whether there exist deed restrictions application to the parcels of land in your area, and if so, whether those include prohibition of the nuisance activities.

Additionally, if you live in a community with a homeowner’s association (HOA), you can:

  • Petition your homeowner’s association (HOA) to enforce any Covenants, Conditions, and Restrictions (CC&Rs) that are being violated by the nuisance rental property.
  • Petition your HOA to enact and enforce restrictions on short-term rentals.


Litigation.

In the event you pursue litigation, having taken the steps outlined above will significantly improve the strength and foundation of your case.  Such a lawsuit is likely to focus on nuisance claims bolstered by applicable laws and zoning and noise ordinances, as well as a requested injunction to enforce any applicable CC&Rs or deed restrictions.  Asserting breach of contract claims based on deed restrictions may also be a viable strategy.

  

Conclusion.

While addressing the nuisances posed by unruly short-term rental properties is not easy, the implementation of certain administrative and litigation strategies may help you and your neighbors take back your neighborhood.

Are you a homeowner who is sick of neighboring short-term rental “party houses” and who wants to hold their owner(s) to account?  Contact our real estate litigation team today: Grant Frazier, Keith GalbutOlivier Beabeau, Michaile Berg, and Justin Larson.