Short-Term Rentals in Colorado

November 15, 2022 | Bill Henry

Colorado short-term rentals have continued to explode in popularity, even through the COVID-19 pandemic. The Centennial State gained about $25 million in tax funds from Airbnb in 2021 — a roughly 90 percent jump from 2019, the Denver Business Journal reported.

Inevitably, the rise in short-term rentals created headaches for many Colorado communities — exacerbating housing shortages and sending rents skyrocketing. In response, Colorado lawmakers have passed a number of regulations on homeowners and landlords that utilize short-term rental platforms like Airbnb, VBRO and Homeaway.

Whether you currently rent out your property or are considering jumping on the short-term rental bandwagon, here are some things you’ll need to know.

Colorado Short Term Rental Laws

The state of Colorado does not have a unilateral definition of short-term rentals. However, a short-term rental is generally defined as a residential property available for rent for a period less than 30 days. 

Colorado has no state-wide regulations governing short-term rentals. However, in 2020, Colorado legislators passed House Bill 20-1093. The bill authorized county commissioners to adopt ordinances that license and regulate short-term rentals (STRs).

County commissioners can fix fees, terms, and issue rules for obtaining and maintaining licenses. Colo. Revised Statutes § 30-15-401(s)

Therefore, rules and regulations about short-term rentals vary from county to county. Additional restrictions may be imposed city to city. 

Learn more about Denver’s short-term rental regulations.

Who is Eligible for a Colorado Short-Term Rental License?

Again, eligibility requirements vary from county to county and even sometimes city to city. In Denver, for example, you must meet the following requirements to obtain a license from Denver Excise and Licenses:

  • If the property is leased, a possession of property certificate showing the landlord’s approval to use the property as a short-term rental.
  • A Colorado driver’s license or Colorado state ID showing your name and address and two of the following: Proof of valid motor vehicle registration, proof of voter registration, Federal or state tax returns or other financial documentation, or a utility bill showing the applicant’s address.

Source: denvergov.org

There are no specific documents that Colorado short-term rental owners need to present to the state. The only documents needed are those related to registering a business, getting an Employer Identification Number (EIN) if applicable, and getting a sales tax license. The documentation varies depending on the type of business, so Airbnb hosts should check what applies to their particular situation.

In some places, short-term rental owners will also need to apply for a lodger’s tax ID. You also must have the proper rental insurance.

Next Steps if You’re Eligible to Get an STR License

Eligible short-term rental owners to apply for a business license, which costs $25 per year. Additionally, Denver renters will also need to apply for a lodger’s tax ID and have the proper rental insurance.

Once you acquire the above essentials, you next must follow these requirements:

  • Post your business license number on all ads, including Airbnb and VRBO listings.
  • Provide guests with a rental packet notifying them of city rules and restrictions and pertinent rental safety information.
  • Maintain general liability insurance in case of property damage.
  • Ensure the property has working smoke and carbon monoxide detectors, as well as a fire extinguisher.

Denver renters who do not follow these rules risk receiving a $999 fine per incident and/or being reported to Excise and License Investigators. It’s important to stay knowledgeable and comply with state and local government rules on STRs.

Find out how R&H helped our clients obtain a short-term rental license after their initial application was denied.

HOAs and Short-Term Rentals: A Colorado Case

In the 2015 case Houston v. Wilson Mesa Ranch Homeowners Ass’n, the Colorado Court of Appeals ruled that short-term rentals do not fall under the “commercial use” label.

The court further held that a homeowners’ association (HOA) cannot prohibit short-term rentals under a “residential use only” covenant restriction:

The amendment to the administrative procedures that precluded unapproved short-term rentals and imposed fines for violations of the prohibition was unenforceable; while the homeowners association had the authority to enforce the covenants, it could not rely on that authority to enforce a nonexistent covenant provision. Houston v. Wilson Mesa Ranch Homeowners Ass’n, 2015 COA 113, ¶ 1, 360 P.3d 255, 256

In other words, your HOA cannot restrict short-term rentals unless it specifies such a restriction in its declaration of covenants, conditions, and restrictions (CC&Rs).

We Can Help You Get a Short-Term Rental License

Short-term rental license regulations vary widely across county lines in Colorado. Failure to abide by those rules could have disastrous consequences. The real estate attorneys at Robinson & Henry have had success in helping clients get short-term rental licenses, even when the license was previously denied by the county. Let our attorneys advise you of your county’s regulations so you are in compliance. Call 303-688-0944 today to begin your free case assessment.

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