Written by Nikki Salgat, General Counsel

In 2017, SB 1350 became effective and addressed vacation and short-term rentals by:    

• Prohibiting a city, town or county from restricting the use or regulation of vacation rentals and short-term rentals;
• Allowing the local government to determine regulations governing vacation and short-term rentals if the regulation is meant to protect public health and safety;
• Providing a mechanism to collect and remit rental taxes to the Arizona Department of Revenue; and
• Creating more economic opportunity and inclusiveness, while protecting the private property rights of the homeowner.

Since enacting the law, vacation and short-term rentals have exploded in popularity.  And, as with all new things, there were unintended consequences and unforeseen circumstances.  Accordingly, the law continued to evolve, now requiring hosting platforms such as Airbnb or Vrbo to collect and remit occupancy taxes, not allowing rentals to be used for special events that require a permit or license, requiring contact information for the owner or designee who is responsible for responding to complaints, and imparting a timeframe for a local government to contact the owner regarding a verified violation.

Last month, Governor Ducey signed SB 1168 giving local governments more power to enforce all applicable laws, regulations, and ordinances pertaining to vacation and short-term rentals.  This newly enacted power allows local governments to require:

• The property owner to obtain and maintain a local regulatory permit or license;
• Before offering a vacation rental or short-term rental for the first time, the property owner or designee must notify all single-family residential properties adjacent to, directly and diagonally across the street from the vacation or short-term rental;
• The property owner or designee to display the local regulatory permit number, license number, or transaction privilege tax license number on each advertisement for a vacation or short-term rental; and
• The vacation or short-term rental to maintain liability insurance or advertise through an online lodging marketplace that provides coverage.

The revised law further allows local governments to:

• Impose a civil penalty of up to $1,000 against the owner for every 30 days the owner fails to provide contact information for the owner or owner’s designee who is responsible for responding to complaints or emergencies;
• Deny issuance of a permit or license under certain circumstances;
• Adopt an administrative process to suspend a local or regulatory permit or license for up to 12 months for verified violations associated with the property;
• Impose civil penalties against the owner of the vacation or short-term rental if the owner receives one or more verified violations related to the same vacation or short-term rental within the same 12 month period; and
• Impose a civil penalty of up to $1,000 if the owner or designee fails to apply for a regulatory permit or license, if required.

The evolving vacation and short-term rental law allows for Arizona property owners to continue to utilize their property as they choose while also addressing community concerns by holding “bad actors” responsible for their actions.

About the Author

Nikki J. Salgat, Esq. is General Counsel to the Arizona REALTORS®. This article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.