Regulations and Legal Restrictions on Short-Term Rentals
With the rise of short-term rental platforms like Airbnb, more and more people are renting out their homes and other properties for short periods of time. However, before listing your rental, it's important to check for any regulations or legal restrictions that might apply.
For instance, in many cities, you will need to register your property or obtain a permit or license before you can start renting it out. There may also be certain types of short-term rentals that are prohibited altogether. While in other places, there are strict rules about how many days per year a property can be used as a short-term rental.
Additionally, you may need to ensure that your property meets all building and housing standards and that you comply with certain zoning and landlord-tenant laws. In some circumstances, you may also need to obtain a business license.
It is crucial to be aware of these regulations if you're thinking about renting out your property on a short-term basis. Local laws vary greatly, so it would be prudent to consult with an attorney in your area before starting a short-term rental business.
Short-Term Rental Regulations in Ohio
On May 10, 2022, an Ohio House committee passed House Bill 563, which would prohibit local governments from enacting laws that ban short-term rentals altogether or regulate “the number, duration, or frequency of rental periods” for these properties. This law is still pending, but if it passes, it would significantly curtail the ability of cities and counties to limit the operation of short-term rentals.
Still, most restrictions on short-term rental properties are enacted at the local level. For instance, Columbus, Cincinnati, and Cleveland all require Airbnb hosts to register their rental units. We’ve summarized the basic requirements for each city in the sections below, but you’ll want to discuss your obligations further with a local attorney.
Airbnb Regulations in Columbus, Ohio
To operate a short-term rental in Columbus, you must obtain a permit from the city’s Department of Public Safety. This requires you to pay for (and pass) a background check as well as pay application and permit fees.
Airbnb Regulations in Cleveland, Ohio
Cleveland law requires short-term rental owners to register annually with the Department of Building & Housing and pay a $70 fee for each unit. Your property will also be subject to interior and exterior inspections to ensure compliance with applicable building codes.
Airbnb Regulations in Cincinnati, Ohio
In Cincinnati, you must register your short-term rental property with the City of Cincinnati and pay a registration fee to receive a permit. Your registration will be valid for three years, and you must display the permit in your unit.
Resources for Other Cities and States
If you do not reside in one of the three major metropolitan areas of Ohio, or if you are interested in operating an Airbnb in another state altogether, different local regulations will still apply. A good place to start your research is the “Local regulations” section of Airbnb’s article on Responsible hosting in the United States.
If your city isn't included in this list, check your local government's website for any information about short-term rental regulations or try to review your local ordinances. We also suggest partnering with a lawyer in your area to ensure that you comply with all other applicable requirements.
Why You Might Put Your Property in an LLC
There are several reasons why you might put real estate in an LLC (or limited liability company). An LLC is a type of business entity that provides its owners with personal liability protection, which means that the owners are not personally responsible for the company's debts and liabilities. This can be an important consideration for someone who owns real estate, as owning property can expose you to a variety of risks and liabilities, such as lawsuits and financial losses.
By putting real estate in an LLC, you can separate your personal assets from the property’s assets, which can provide you with added protection in the event that the property is subject to legal action or financial losses. This can also help protect your personal assets from being seized to satisfy the company's debts or liabilities.
Additionally, owning real estate through an LLC can provide certain tax benefits and can make it easier to manage the property and transfer ownership. For example, an LLC can allow you to allocate profits and losses among its members in a way that is more favorable for tax purposes, and it can provide a more flexible and straightforward way to transfer ownership of the property.
You can check out a podcast episode from earlier this year to learn more about legally protecting your short term rental.