Shedding Light on the Legality of Hosting a Property on Airbnb in Las Vegas

The Legal Status for Airbnb in Las Vegas

Over the past few years, Airbnb has become the go-to accommodation, sparking a global phenomenon that has affected millions of travelers and "hosts." As its popularity rises among those wanting to experience Las Vegas, so too have the legal issues associated with short-term rentals in the city. Since 2017, city officials have passed over a dozen bills regulating short-term rentals in the area. In September, the City Council passed an ordinance aimed at enforcing occupancy restrictions, the number and type of people living on a property, and how much of the home can be in use by guests at once . Additionally, short-term rental permits are now required per residential address, and property owners may legally rent out only two properties for short-term rental terms, pending city approval. Although short-term rentals were first officially regulated in June 2017, violations run rampant. A recent report by the city showed that the number of residential units being rented through short-term rental sites increased by 78 percent between 2018 and 2019, with 1.4 percent of the units in the city in violation of local regulations. The highest number of uses of Airbnb and VRBO units in Las Vegas were found just west of the famous Strip, the only other area experiencing a substantial amount of short-term rentals.

Permit & License Obligations

Prior to operating as a short-term rental property in the City of Las Vegas, a property owner must obtain a short-term rental permit from the City of Las Vegas through the Department of Planning. In order to be eligible for a permit, the applicant must be the record owner of the subject property and be in compliance with all applicable laws or regulations. If the property has multiple units, each unit cannot have more than two bedrooms and there can be no more than two adults per bedroom. The application for a permit requires a list of the property owner’s short-term rental listings on Airbnb, as well as a photograph of the property that clearly depicts both or either the building number and street address. An applicant can submit a new list of short-term rental listings at any time, with the first submission required with the permit application.
In addition to the City’s short-term rental permit, the property owner is required to obtain and submit with the permit application either a Nevada Business License or a Las Vegas Business License.
If the property is located in the City of Las Vegas, and the property owner has obtained a permit and a business license, the property owner must not be in violation of the following:

1. The operation of a short-term rental property is allowed as a permitted use in the Code Residential and Mixed-Use Districts, and a conditional use in the Code Commercial Districts; and,
2. The host must comply with the following operational requirements:

A. An interim review may be conducted by the Department of Planning before the end of the fifty-two-week period to confirm compliance with the short-term rental permit.
B. At anytime during the permit review process or the fifty-two-week permit timeframe, any evidence that points toward material falsification or misrepresentation of ownership, use or status may result in permit revocation or denial of renewal.

Restrictions & Regulations for Hosts

One of the most frequently asked questions regarding its legality is whether or not it’s lawful for an owner to rent out their home via Airbnb when renting of that nature is prohibited by a homeowner association. In Layton v. Wentworth Milner in the 43rd Judicial District Court of Texas at Travis County (Case No. D-1-GN-16-005036), the Travis County District Court ruled that failure to comply with a homeowner associations short-term rental prohibition can result in a fine. As such, Airbnb hosts must make sure they are in compliance with their homeowner association and/or deed restrictions prior to listing on the Airbnb website or renting out their property via other channels such as FlipKey, VRBO, or HomeAway. Las Vegas prescribes strict occupancy limits for all homes rented for less than 30 days. Occupants, as defined by Las Vegas residential codes, includes any person who occupies a room within a dwelling regardless of length of stay. By Las Vegas code, no more than two persons overage the age of six are allowed per bedroom, plus two additional persons per dwelling. Nevada law, which is in effect in Las Vegas, limits the total number of occupants to no more than ten, regardless of the number of bedrooms in the dwelling. In addition to the restrictions set forth by Las Vegas, or your HOA, registrants for short-term rental with the State of Nevada need to meet the requirements published by the Department of Taxation including, among others, adherence to local zoning laws. If the county or city has determined that the short-term rental of dwellings is an unlawful use, then a "disqualified transient lodging establishment" license will be given, and the licensee is not permitted to continue to operate the business in violation of the laws. All short-term rental need to be registered with the State of Nevada and obtain a short-term rental permit from the Department of Taxation. Host also need to register with Clark County, the City of Las Vegas, and the City of North Las Vegas. Short-term rental is defined in Nevada law as any dwelling available for rent travel purposes for fewer than 30 consecutive days.

Non-Compliance Penalties & Fines

Failure to comply with city rules about vacation rentals in Las Vegas can bring about a host of fines and penalties of escalating severity, depending on the severity of the violation. The following outlines the various levels of penalties, as well as the enforcement practices employed by the City of Las Vegas:
Parking Citation: $25
Citation with a minimum $500 fine: $500
Citation with a minimum $1,000 fine: $1,000
Citation with appearance in Municipal Court: Maximum penalty $1,000 and/or six months in jail.
The fine amount for the first, second and third violations is $500. If the violator fails to remedy the situation after three (3) violations, the City may suspend or revoke licensing privileges.
Furthermore, the city has the authority to pursue civil remedies for enforcement of the above penalties through a civil lawsuit, including injunctions to compel compliance with the regulations.

Effect on Las Vegas Communities

The impact of Airbnb properties on local communities in Las Vegas is a topic of significant debate. On one hand, Airbnb can provide a new stream of income for homeowners and boost the local economy through increased visitor spending. At the same time, however, there have been growing concerns over how the influx of short-term renters affects the people who live alongside them 365 days a year.
Economic Impact
Some studies indicate that Airbnb has a modest positive effect on the local economy. The company claims that its visitors, who they refer to as "guests," spend an average of $200 a day, which directly benefits the local economy. In 2019, it was estimated that short-term rentals brought in $67 million in tourism spending to the city. Furthermore, according to an Airbnb-commissioned study conducted by tech and research firm Airdna, short-term rentals support 530 jobs in the Las Vegas area and generate $12.69 million in tax revenue.
Community Feedback
However, while Airbnb proponents tout the benefits to the local economy, detractors cite the negative effects on local neighborhoods. An Airbnb spokesperson argued that all of the studies conducted have their flaws, stating that "many also carry obvious study design flaws, have limited granularity, or rely on incomplete or poorly representative data." Indeed, some locals say that it is easy to spot the places where tourists have taken over residential streets. "It’s pretty annoying. It’s what happens when there are a lot of Airbnbs in a neighborhood. The homeowners tend to get fed up with the noise , and this will probably result in another HOA decision to crack down on the noise on the strip," says Taylor Froman, an attorney who represents the local homeowners’ association in Clark County. And while many residents believe that there will always be music on the strip, others believe that the housing crisis that Las Vegas has been experiencing for the past decade means that the city must foster a more stable economy. While some argue that a housing shortage is caused by casino worker Airbnb rentals, others point to the casinos themselves as taking a chunk of the housing stock away from residents. In addition, while many believe that entertainers are booking Airbnb homes in the city, others argue that this is not the case.
Social Considerations
In terms of the social effects, a study from Airbnb recently showed that the company promoted diversity. For example, the study found that while most of the guests were from California, others came from Michigan, Texas, Washington, and Florida. They also came from different countries, including Canada, England, Mexico, and even New Zealand. On the other hand, locals also have some social concerns of their own. For example, while some locals embrace the diversity that short-term rentals bring, others believe that more "rampant partying" brings a wide variety of "anti-social behavior." And while advocates believe that having short-term rentals and Airbnb in town promotes the profession of providing rooms as a side job, some argue that the profession of homeowner is becoming "less valued."

Airbnb Host Challenges & Updates

Laws controlling the use of short-term rentals such as Airbnb, HomeAway, VRBO, etc. are a source of contention for many. Locally, the Las Vegas City Council and Clark County Commission have implemented regulations through an ordinance specific to short term rentals. The City of Las Vegas adopted its Short Term Residential Rental dwelling ordinance on October 19, 2016. The requirements include registration with the Business Licensing and Code Enforcement Divisions, certification of compliance with the City’s Fire Code, normal safety inspections and a $500 business license fee. The City of Las Vegas Code, Title 6, Chapter 420 while not regulating such rentals like other cities has an ordinance that takes effect on August 1, 2018 that will levy an additional $500 fine for violators of the registration ordinance. After that, officials could impose criminal charges for repeated violations and build-up $1,000 fines. Las Vegas Metropolitan Police Department has been issued tickets to the violators for over occupancy and nuisance parties. The Clark County in October 2016 adopted an ordinance to license short-term rentals in residential neighborhoods, but Clark County rentals do not require the same strict rules as the City of Las Vegas. The Clark County rental requirements include a $500 application fee, and requires proof of general liability insurance of at least $500,000 (combined single limit) which covers damages or personal injuries. Any licensee who fails to comply with the provisions of the chapter are subject to the imposition of an administrative fine of $500 for each violation, to be increased by an additional $500 for each subsequent violation within the same calendar year. Both agencies have funding from the fines collected to keep an eye on the industry and enforce the laws, including all associated outsourcings necessary to do so.

Tips & Tricks to Stay Compliant

Like the average Las Vegas Strip hotel operation, the rental property owner must ensure compliance with the various laws and regulations that govern our community. This is a challenge when most municipalities typically only focus on the types of short term rentals occurring at houses, townhomes, and condo associations, without a focus on the multi-family rental market that occurs in hotels, the rental car industry, and even RV parks. However for any individual or entity looking to operate an Airbnb listing as a business, it is paramount that you understand all of the licensing and permits that may be needed in addition to registering with your local jurisdiction.
A rental unit consisting of an individually rented room or rooms in a hotel, motel, or similar lodging establishment is not required to be licensed if no other services are offered to the guests. (NRS 646A.090) If additional services are offered to the guest(s), including but not limited to assisting with the reservation of tickets for any entertainment or other services, the hotel, motel or other lodging establishment may be required to be licensed as a "Travel Club." (NRS 646A.076) Prior to booking a short term rental, the operator or hosting platform must ascertain the business license number of the prospective hosts. If the operator/hosting platform fails to license check before finalizing a reservation, the platform will be liable for payment of the enforcement fees levied by the City of Las Vegas along with other penalties that may be assessed against the host. If you’ve booked a reservation through another hosting platform that does not enforce compliance with this regulation and you have not provided them with documentation showing compliance, you must contact the city manager to obtain the necessary documentation. It is strongly recommended that you contact the municipality in which the rental property is located to confirm the necessary licensing and permits to operate any short term rental operation . Where necessary, license verification must be submitted whenever a reservation is booked through an online hosting platform. If you are thinking about becoming a host, you should also consider whether your property’s association (if applicable) permits short term rentals. Even if your homeowners association does not presently permit short term rentals, you may be able to successfully petition the HOA board to authorize a short term rental use of your home, by seeking an amendment of the restriction that prohibits short term use. Even though rental restrictions are generally unenforceable if they were not properly recorded, and the rental restrictions in your association’s CC&Rs do not constitute a valid covenant running with the land, there is a good chance your association will nevertheless try to enforce their rental restrictions against you. If you are considering any kind of work around to enable a temporary rental of your property, such as renting a room or two to short term guests when you aren’t using the property, you could still be in violation of your association’s CC&Rs. If you are interested in renting your home in Las Vegas, you should see about having a club created to protect the interest of members that are being adversely affected by the association’s rental restriction. It is important to act quickly; because once your members have sold their homes, it will be more difficult to convince the board of directors to reverse the rental restriction. If the association eventually goes through with implementing a rental restriction, paying to amend the governing documents becomes moot because no one will want to buy into the association. For many associations, the elimination of the rental restriction will mean an influx of new buyers into the association. Any homeowner not currently living in the association that owns a home and has no plans to move into their property, is considered an investor, and will have a vested interest in amending the governing documents to permit rental, regardless of what the rental restriction is.