People love the novelty of living like a local. Travelers can now authentically experience local culture, enjoy more lodging options than ever before, and get substantially lower rates by booking a short-term rental through online platforms like Airbnb and VRBO. The popularity of these new websites also has given homeowners new opportunities to capitalize on their property and to generate additional income.

Locals, however, are not always so thrilled to welcome partygoing visitors into their streets and neighborhoods. It's understandable that the surge of short-term rentals in Denver has given rise to many concerns. It took two years, but on June 13, 2016, the Denver city council passed an ordinance to regulate and monitor short-term rentals in Denver, officially giving homeowners the go-ahead to rent out their primary residence starting July 1, 2016. As a visitor to the city, it's important to be aware of the new legislation in order to be fully compliant with local law.

Decipher the Legal Lingo

The Details on Denver's New Rules on Short Term RentalImage via Flickr by ** RCB **

The key phrase to remember is "primary residence." Legally, this is where a person lives most of the time. Homeowners are allowed to rent out a portion of their home, such as a garage apartment, mother-in-law suite, or spare bedroom, to transient visitors for up to 30 days in a month. If the owner is out of town, he or she can even rent out the entire house. Reading between the lines, you can see that any rental exceeding 30 days would be in violation of the ordinance. Second homes and investment properties were also purposely excluded from the law in an attempt to address the local community's concerns.

The new ordinance tests the waters, allowing the community and members of the city council to monitor the rates at which out-of-towners are coming into a neighborhood via platforms like Airbnb and VRBO.  They can assess whether the influx seems to be harmful to the community, as some residents fear, or whether these short-term rentals actually help stimulate the local economy. There's a chance that the ordinance could be expanded in the future to accommodate these secondary properties, but that remains to be seen pending data analysis.

Rent Intelligently

The Details on Denver's New Rules on Short Term Rental

Image via Flickr by Larry Johnson

As an Airbnb or VRBO user, you commit to stay in a short-term rental property based on trust and instinct. You trust in the online profile, the photos, the reviews, and the listed description and policies. You also trust in the reputation of the service providers, such as Airbnb, and in their specific guest refund policies and protections.

In truth, the new ordinance doesn't say much about short-term rental tenants' rights, but there are provisions that you can evaluate and use to your advantage to help you select a Denver rental that is fully compliant with the new law. The city is allowing a six-month soft enforcement period for all property hosts to prepare and process their paperwork, so take that into account. But after the grace period ends, on December 31, 2016, you'll need to keep the following details in mind when renting short-term lodgings in Denver.

All property hosts are now required to have a business license. Beginning in 2017, be wary of listings that do not incorporate or list a tax ID number on advertisements and profiles, as the advertised lodgings might be illegal.  Your host is also now required to charge a 10.75 percent lodger's tax in addition to your total rate for the stay, which is the same rate collected by traditional hotels in the area. If your host does not include the tax in the fee, be sure to inquire for your own legal protection.

Read the Fine Print

Hosts must now also outfit their space with basic safety protections, including smoke and carbon monoxide alarms, and they must also prepare a property brochure that details emergency contact information for your reference in case your host is unreachable or out of town. If you don't find these basic provisions on your arrival, proceed with caution, or consider contacting the site platform for alternative lodging options or a refund.

There are no known penalties yet for renters, but property hosts who are not compliant risk hefty fines if they knowingly violate the ordinance. First, they are required to obtain a $25 license. Failure to advertise their business ID number on their advertisements can lead to a steep $999 fine for every day they are in violation of the code.

Only the future will tell whether renters will also be subject to fines for knowingly staying in illegal short-term rental lodgings. As always, it's smart to protect yourself, to do your homework, and to know the facts about the local law. If in doubt, you can always consult a good local civil lawyer.

Contact Rogers & Moss for your free, no-risk, consultation.