On July 1, Governor Cooper signed into law Senate Bill 483, a one-page clarification to the Vacation Rental Act that, on the surface, didn’t appear all that meaningful. But according to a confident prediction from the right-leaning Carolina Journal in May, SB 483 could “put a stop to the [Raleigh] City Council’s rules” regarding Airbnb and other short-term rentals

Those rules—adopted May 21 by a predictable 5–2 council majority, with council members Nicole Stewart and Corey Branch voting against the regulations—restrict residents from renting more than two rooms of their house at a time to a maximum of two adults at a time, and dictate that these rooms cannot have a separate kitchen or privacy from the main dwelling and that homeowners must be living onsite. It also requires those wanting to rent rooms on Airbnb and other sites to pay $176 for a permit that must be renewed annually for $86. 

Beginning January 1, those found in violation will accrue fines of $500 per day, and their permits can be revoked for certain violations. That same day, the city will also begin enforcing its ban on whole-house rentals, unless the council manages to create a new regulatory structure in the meantime. 

The new state law, however, prohibits Raleigh (or any other local government) from enforcing “any ordinance that would require any owner or manager of rental property to obtain any permit or permission … to lease or rent residential real property” and forbids any “special fee or tax on residential rental property that is not also levied against other commercial and residential properties.”

Raleigh’s permit requirements for Airbnb rentals do just that. 

Yet the city says the new law doesn’t affect its rules at all—though it hasn’t made its reasoning clear. 

City attorney Robin Tatum Currin did not respond to the INDY’s request for comment Monday. But on Tuesday, Julia Milstead, the city’s public information officer, said that “after reviewing [the law], we do not believe it has any impact on the city’s current zoning regulations related to short-term rentals.”

But asked if the city attorney’s office could provide a memo explaining its rationale, Milstead replied that none existed. 

“The city is wrong,” General Assembly special counsel Brent Woodcox told the INDY in a Twitter message Tuesday afternoon. “[The] city is going to get sued and lose if they try to require short-term rental hosts to get a permit. A lawsuit is already being planned.”

According to Woodcox, who advocates for increased density and short-term rentals through the website and Twitter handle YIMBY Raleigh, the law mandates that “cities and counties must treat short-term rentals in the same way they treat long-term rentals. No permitting requirements. No special fees on short-term rentals.”

On its surface, the Legal Analysis Division’s explanation of the bill appears to support Woodcox’s interpretation

Specifically, the analysis says cities cannot do this (emphasis added): 

  • Adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission from the local government to lease or rent residential real property or to register rental property with the local government, except when an individual rental unit has either more than four verified violations in a rolling 12-month period or two or more verified violations in a rolling 30-day period, or upon the property being identified within the top ten percent (10%) of properties with crime or disorder problems as set forth in a local ordinance.”

Again, Raleigh’s regulations do that.

Still, says Raleigh attorney and former Wake County Commissioner John Burns, these are murky waters. He told the INDY Tuesday he thinks both interpretations are “incorrect” and the “answer is somewhere in the middle.” In a blog post on his law firm’s website assessing the legal implications of the statute, Burns writes that “questions abound.”

“The Vacation Rental Act specifically does not apply to rentals to tenants who are ‘temporarily renting a dwelling unit when traveling away from their primary residence for business or employment purposes,’” he points out. “The law is silent on how that distinction would be enforced …. Moreover, the law does not address whether cities and counties can use zoning law to regulate where short-term rentals can be undertaken and whether those zoning laws can be used to effectively eliminate short-term rentals across an entire city.”

Even if Raleigh can’t use its current system to regulate or even ban short-term rentals, there may still be other legal options at its disposal. 

Burns concludes that homeowners and landlords—as well as city and county legal departments across the state—would be “well-advised to watch these developments closely.”

Contact editor in chief Jeffrey C. Billman at jbillman@indyweek.com. 

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