Laying Down the Law – Short Term Rentals and Property Management
July 2, 2021
With the rising popularity of short-term rentals in Arizona over the last few years, more people are becoming interested in entering the short-term rental market. This article addresses two of the regulatory issues concerning short term rentals in Arizona. First, pursuant to A.R.S. §§ 33-1901 and 1902, all rental properties must be registered with the local County Assessor. If an owner fails to register with the County Assessor, the city or town may impose a civil penalty in the amount of $150 per day for each day of violation after the date of the most recent Notice of Valuation.
Management of Short-Term Rentals
Second, in some cases, a real estate license is required to manage rental property of third parties. Pursuant to Arizona law, no real estate license is required to rent or manage property owned by you or your limited liability company or corporation. Pursuant to A.R.S. §§ 32-2121 et seq. and A.R.S. §§ 32-2171 et seq., however, a real estate license is generally required to manage real property owned by a third party. Until recently, confusion and debate abounded in our real estate community over whether a real estate license was required to manage short-term rental properties. The Arizona Department of Real Estate put that debate to rest and confirmed its position that per A.R.S. 32-2121(A)(15), a real estate license is not required for “A person who, on behalf of another, solicits, arranges or accepts reservations or money, or both, for occupancies of thirty-one or fewer days in a dwelling unit in a common interest development.” Thus, a real estate license is not required to manage most short-term rental arrangements.
Best practice requires any property manager to utilize a comprehensive, written, property management agreement for every short-term rental arrangement to govern the relationship between the property manager and the owner, as well as a written short-term rental agreement to govern the relationship between the guests and the owner/property manager. The short-term rental agreement should expressly limit the duration of the stay to thirty (30) days or less to ensure that the rental is regulated by Arizona’s Inn Keeper Statutes and not the Arizona Residential Landlord Tenant Act.
If you or someone you know has questions regarding short-term rentals, contact us today to schedule an office meeting or virtual consultation with one of our real estate attorneys. Mr. Charles and our team can advise on most if not all issues surrounding short-term rentals and can assist with the preparation of property management agreement and short-term or seasonal rental agreements.
Christopher J. Charles is the founder and Managing Partner of Provident Law®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS® (the “AAR”). Mr. Charles holds the AV® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. Christopher teaches continuing education classes at the Arizona School of Real Estate and Business and he can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.