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Short Term Rentals


Rollo Tomassi

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This seems to be a very hotly debated topic across the country.  There are several lawsuits around the state addressing various issues surrounding STRs -- One in Austin that claims that the regulations the city has in place are unconstitutional because they treat short-term renters (less than 30 days) differently than they treat long-term renters.

The Texas Supreme Court recently rendered an opinion that short-term renters' use of the property is residential in nature, and not commercial.  This article discusses that opinion and the possible impact on city ordinances, like Austin.

https://www.texastribune.org/2018/05/25/airbnb-homeaway-texas-supreme-court-ken-paxton-austin-ordinance/

Texas Supreme Court sides with short-term renters, likely bolstering state’s fight against Austin’s ordinance

by Emma Platoff May 25, 201811 AM

 

 

Air_BnB_Mariana.jpg

Homes on Garden Street in Austin on Feb. 24, 2017. Shelby Knowles for The Texas Tribune

 

The Texas Supreme Court has sided with short-term renters, delivering a win to Texas homeowners who hope to take advantage of websites like Airbnb and HomeAway, and likely bolstering a separate, ongoing case against the City of Austin’s short-term rental ordinance.

Kenneth Tarr bought a home near San Antonio in 2012, but when his employer transferred him to Houston two years later, he began to rent it out on a short-term basis. His homeowners’ association soon took issue with that, telling him that the practice violated his deed restrictions, which said his home had to be used “solely for residential purposes.”

Tarr and his lawyers argued that short-term rentals did constitute a residential purpose: Visitors ate, slept and entertained themselves as anyone would at home. The homeowners’ association countered that Tarr’s property operated more like a hotel than a home, meaning it was primarily serving a commercial purpose.

“So long as the occupants to whom Tarr rents his single-family residence use the home for a ‘residential purpose,’ no matter how short-lived, neither their on-property use nor Tarr’s off- property use violates the restrictive covenants in the Timberwood deeds,” Justice Jeff Brown wrote Friday for a unanimous court.

Patrick Sutton, Tarr’s lawyer, said Friday’s ruling will apply to homeowners in homeowners associations across the state, most of whom operate under similar deed restrictions — and its impacts may even reach further than that.

“This is about as strong of a property rights type opinion as one can imagine,” Sutton said. “It is broadly applicable to [city] ordinances and to deed restrictions — it tells us what nine justices on this current court think about people using their land.”

Separate from deed restrictions, there are also local ordinances on short-term rentals in place in more than a dozen Texas cities. While Friday’s ruling doesn’t directly concern those restrictions, the strong attention it gives to property rights and the court's unanimous support for it may well bolster the case of a group of short-term renters and guests who have sued the city of Austin, alleging that its short-term rental ordinance, one of the state’s oldest and strictest, unconstitutionally infringes on their rights.

In that high-profile case — which has drawn the support of Texas Attorney General Ken Paxton — a small group of plaintiffs, represented by the Texas Public Policy Foundation, argue that by restricting short-term rentals, the City of Austin prevents homeowners from using their property as they see fit, and treats short-term renters differently than it treats long-term renters.

Rob Henneke, a TPPF lawyer representing those plaintiffs, said Friday that “the Texas Supreme Court got it right.”

“This is a decision affirming private property rights,” he said, noting that the reasoning in the case supports his argument against Austin’s ordinance in several major ways.  

In overruling a lower court’s previous decision on Tarr’s case, the ruling removes much of the legal grounding for the City of Austin’s argument, he said. A lawyer for the city did not immediately return a request for comment. The ruling also affirms a separate short-term rental decision that supports TPPF’s side, Henneke said.

The decision marks the high court’s first major ruling on this issue at a time when short-term rentals — and the restrictions on them — are being litigated across the state. While short-term rentals have long been a reality, especially in vacation destinations, their spike in popularity thanks to web platforms like HomeAway and Airbnb has exposed holes and discrepancies in the laws that regulate them, ripening the issue for litigation across the state.

Short-term rentals have also emerged as yet another local control issue in a state where Republican state leaders have moved more aggressively in recent years to override local decisions made by Democratic-dominated city councils. As that war proceeds, Friday’s decision marks a major victory for the state.

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21 minutes ago, Gene Parmesan said:

What's the debate?  Seems like a no brainer to me, what's the downside in this?

Some of the arguments against are that STR that are completely disruptive are not held accountable as it's the renters not the tenants that are punished - since they rotate, they aren't fully punished for their actions. Also that you are putting hotels in residential areas without zoning.

Note that I don't think that the negative of STR outweigh the positives. 

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48 minutes ago, Gene Parmesan said:

What's the debate?  Seems like a no brainer to me, what's the downside in this?

My neighbor owns the house next door and lives across the street, he has started renting his second home out as a STR after having issues finding a long term renter. I can tell you the downside of it first hand. It fucking sucks. Living near the lake, we have a new crew of people partying every weekend. So far out of the 10 or so weekends since he started this, we have had one weekend with quiet renters. Just this last weekend we had a group of chad bros partying till 4 am outside keeping everyone up. Despite me asking them several times to please keep it to a dull roar so my kids could sleep. I ain't no snitch and don't want my dog shot so I didn't call the cops, but I was very close. It is out of control. Fuck STR. Thankfully it looks like the neighbor is going to sell his house across the street and move back next door later this year when his last kid is out of the house.

Edit: The wife and I even talked about renting it out long term just to get peace and quiet back.

Edited by HOOKEM4
fuck ou
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1 hour ago, GabrielsHorn said:

Some of the arguments against are that STR that are completely disruptive are not held accountable as it's the renters not the tenants that are punished - since they rotate, they aren't fully punished for their actions. Also that you are putting hotels in residential areas without zoning.

Note that I don't think that the negative of STR outweigh the positives. 

housing supply is a big argument, especially in California and other high cost of living areas.  Investors see more profit with STRs than single family homes etc. further limiting supply

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1 hour ago, HOOKEM4 said:

My neighbor owns the house next door and lives across the street, he has started renting his second home out as a STR after having issues finding a long term renter. I can tell you the downside of it first hand. It fucking sucks. Living near the lake, we have a new crew of people partying every weekend. So far out of the 10 or so weekends since he started this, we have had one weekend with quiet renters. Just this last weekend we had a group of chad bros partying till 4 am outside keeping everyone up. Despite me asking them several times to please keep it to a dull roar so my kids could sleep. I ain't no snitch and don't want my dog shot so I didn't call the cops, but I was very close. It is out of control. Fuck STR. Thankfully it looks like the neighbor is going to sell his house across the street and move back next door later this year when his last kid is out of the house.

Edit: The wife and I even talked about renting it out long term just to get peace and quiet back.

Neighbors selling eh?

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I see both sides of this. Short term rentals do provide some extra supply when hotels are getting booked up on our really busy weekends. We have lost conventions due to lack of available rooms. I could also see how it would suck to live next to a hotel when you live in a residential neighborhood. Landlords typically have more control over renter behavior when they are staying longer than 3 days. There seems like some sensible middle ground where people can rent properties when they are not in use for the short term while preventing people from buying properties only to turn them into hotels. 

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We invested in a house in Austin to use for some football games (season ticket holders living out of town), and a handful of other weekends.  Austin is in between where we live (FW) and where my wife's family lives (Corpus) and I hate going to Corpus so it makes a great meeting spot to see her family.  The other weekends it's rented out at a STR, and it covers all of the costs.  One of the reasons we picked the house was the fact that it is bordered on one side by the street, the other by another house that is full time STR, and an empty lot behind that we own and use for parking so there is very little disturbance for neighbors.

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  • 3 years later...

Just starting to pay attention to this as my family has a STR in a small Colorado town. Currently there is a vote to increase the annual taxes by 1000% a year after doing a previous 1000% increase in annual taxes.

I'm having a hard time understanding the small town's opposition to income from a STR as the majority of economy of the town is tourism. It's as if the long time locals are mad that they have become a tourist town and instead of milking the cow, they are looking to shoot it.

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6 minutes ago, MoJames said:

Just starting to pay attention to this as my family has a STR in a small Colorado town. Currently there is a vote to increase the annual taxes by 1000% a year after doing a previous 1000% increase in annual taxes.

I'm having a hard time understanding the small town's opposition to income from a STR as the majority of economy of the town is tourism. It's as if the long time locals are mad that they have become a tourist town and instead of milking the cow, they are looking to shoot it.

Yeah I don’t get it either. Fortunately ours are in Galveston, and so far they seem to be embracing it. They have required both AirBnB and VRBO to switch to collecting taxes for them this month instead of self reporting.  They probably realized they were losing out in revenue. 

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