How do I regulate my short-term rental? Importance to create your own regulations for your short-term rental property.
by Quatro Legal Real Estate Team | Jan 25, 2024 | Article, Real Estate
The proliferation of technology and the adoption of technological platforms to enhance and facilitate the vacation experience have contributed to the widespread popularity of short-term rentals as a form of lodging. Platforms such as Airbnb, Vrbo, Wimdu, Booking, and Expedia (among others) have emerged as primary contenders to traditional lodging options in vacation destinations, particularly the conventional hotel.
The Short-Term Rental phenomenon does not come free of problems and has obligated the Costa Rican government to create regulation to permit and facilitate the operation of short-term rental facilities and protect touristic activity as well as property owners. However, the law did not include any content on how to deal with problematic tenants or occupants or other types of grievances. Therefore, we drafted this blog for property owners since it is on them to create these regulations and enforce them within the limited scope of the law.
What is considered Short-Term Rental or Non-Traditional Lodging? Costa Rican law has defined non-traditional lodging as the provision of tourism services involving the short-term rental of structures such as houses, apartments, villas, chalets, bungalows, rooms, or comparable construction which constitutes a single unit for durations that do not surpass a year or fall below 24 hours. Renting periods exceeding a year will be classified as traditional property rentals, such as houses or apartments, falling within the purview of a separate set of regulations. Likewise, if the rental duration is less than 24 hours. These two points will not be addressed in this piece.
Short-term rental contracts are novel and have a new regulatory framework called Law for the Regularization of Non-Traditional Lodging and its Intermediation through Digital Platforms and its Regulations, hereinafter the Framework. Therefore, to date there is limited understanding on how specific parts of the regulations are enforced and how problems will be dealt by the administrative and judicial authorities over time.
For historical purposes, in 2019, the Costa Rican Legislative Branch passed the aforementioned law to directly address concerns raised by the hotel industry and the public on short-term rental operation. This Framework Law is applicable to the entities designated by this legislation to partake in the non-traditional lodging services, encompassing users, providers, as well commercializing or intermediary companies involved in these services, whether as individuals or legal entities. It also extends to any individual or affiliated entity engaged in this activity for durations ranging from no less than twenty-four hours to no more than one year.
In order to provide these services, individuals seeking to offer their space for non-traditional lodging must first obtain authorization from the Costa Rican Institute of Tourism (ICT), which is the government agency responsible for promoting sustainable tourism. They are also required to be compliant with the operational prerequisites and the relevant laws applicable to any commercial establishment catering to tourist accommodations and tax responsibilities stemming from the commercial activity of renting a place for short-term accommodations.>/p>
However, what happens or what are the rules and regulation applicable for each independent house, property, condo, room, or space? What does the law say or who is responsible to create them?
Article 6 of the Law for the Regularization of Non-Traditional Lodging and its Intermediation through Digital Platforms and its Regulations, outlines the obligations of users engaging in non-traditional lodging. This article specifies that every user of the service has the obligation to adhere to, and be respectful of, the usage rules or internal regulations of the establishments, as well as the specific regulations of the visited locations. It also states that each user is accountable for their use of the non-traditional lodging service.
This statement provides us with a framework for addressing reckless or disruptive behavior on the premises of the property being utilized for short-term rental. Furthermore, the Framework Law also mandates that users assume responsibility for any potential damage caused to the facilities and for failing to comply with the agreements established by the non-traditional lodging service.
Since this article is not comprehensive and does not state what are the rules and regulations that shall be applicable, it is every owners responsibility to draft an internal policy, rules and regulations that the users and guests of the short term rental must accept, adhere and sign, thereby agreeing to acceptable behaviors and understanding the circumstances under which the short-term rental may be terminated before the originally agreed-upon duration and/or the legal actions that maybe undertaken after its termination.
For example, the Framework Law does not include any regulations for eviction from the premises or economic penalties for damages; therefore, it must be understood that it is the owner or management entity responsibility to create the rules and enact the proper mechanisms to protect itself, the property and the other guests or occupants.
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