The State of Short-Term Rentals in Asheville
A lawsuit filed on October 20th in Buncombe County Superior Court has taken the current debate
in Asheville over short-term rentals (STRs) to a new level by
challenging the City’s authority to enact ordinances regulating STRs.
In Robertson et al v. City of Asheville,
No. 15-CVS-4688, the plaintiff homeowners routinely rent out their
residences to guests for periods of fewer than 30 days, expressly in
violation of § 7-2-5 of the Unified Development Ordinance (UDO).
Having been issued citations by the City under the ordinance, the
plaintiffs are challenging the legality and the constitutionality of the
ordinance on a number of grounds, arguably the most interesting of
which is claiming that the City has no authority to regulate short-term
rentals because that authority is “preempted” by the North Carolina
Vacation Rental Act (N.C. Gen Stat. § 42A-1 et. seq.)
a municipal ordinance is invalid (“preempted”) under North Carolina law
where it purports to regulate a field for which the State of North
Carolina has shown legislative intent to provide a complete and
integrated regulatory scheme to the exclusion of local regulation, or if
the local ordinance makes unlawful an act, omission, or condition which
is expressly made lawful by State law. N.C. Gen. Stat. § 160A-l74(b).
The plaintiffs in Robertson contend that this is
what has occurred with regard to STRs by virtue of the Vacation Rental
Act. Acknowledging that the “growth of the tourism industry has
led to a greatly expanded market” for short-term vacation rentals that
present “unique situations not normally found in the rental of primary
residences for long terms,” lawmakers concluded that it is “necessary
for the General Assembly to enact laws regulating the competing
interests of landlords, real estate brokers, and tenants.” N.C. Gen. Stat. § 42A-2.
Although the Vacation Rental Act appears more focused on
the contractual relations among the short-term tenants, landlords and
real estate brokers -- rather than expressing a broad policy statement
on the legality and regulation of short-term rentals within cities --
the Plaintiffs find support for their position in a section of the Act
that implies that vacation rentals of less than 30 days are legal in
contrast to the City’s ordinance providing just to the contrary – this
amounts to a near head-on collision, legally speaking.
Whether the Plaintiff’s contention will withstand judicial
scrutiny remains to be seen and it could be months and more likely a
year or more before the lawsuit reaches trial.
The stakes are obviously high both locally and
nationally. There are more than 600 short-term rentals listed on
the various websites for Asheville. And although the Plaintiffs were
fined $100 per night under the old ordinance, City Council recently
raised the penalty provision of the ordinance to call for a fine of $500
per night. Rather than relying on citizen complaints to alert it
to short-term rental violations, moreover, the City also decided to
create an enforcement position that would actively seek out violators.
If recent events in San Francisco are a harbinger of things
to come, it will not be surprising if short-term rental companies like
AirBnB, HomeAway and VRBO enter the fray as part of a national campaign
to keep short-term rentals legal. Following on the heels of
successfully defeating “Proposition F” – which would have curtailed
short-term rentals in San Francisco – AirBnB has stated its intention to
combat attempts by municipalities to regulate short-term rentals
elsewhere. It is doing this in part by mobilizing the property
owners for whom it lists vacation rentals as a potent political
force. AirBnB and its ilk may also follow Uber’s strategy whereby
it pays the citations and/or defends actions brought against its drivers
by the various municipalities.
Keep in mind that the City's ordinance only applies where
the entire property is rented. It remains legal for a property
owner to rent out a portion of the home on a short-term basis – a
so-called “homestay” – just so long as the owner resides in the home at
the same time.
Finally, as discussed in a prior edition of A Legal Moment,
the issue of short-term rentals is also a hot one in private planned
communities where residents feel that short-term rentals have the effect
of decreasing property values and generally raising the nuisance level
occasioned by partying short-term tenants. Homeowner Associations
are actively amending their Declarations with provisions regulating both
long- and short-term rentals within their jurisdictions.
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