INCREASED PENALTIES FOR VIOLATIONS OF SHORT-TERM RENTAL ORDINANCES

With the expanding market of short-term rentals in California, the laws regulating their operation continue to evolve. Earlier this year SB 60 was passed, amending Government Code sections 25132 and 36900, granting cities the power to increase penalties for violations of ordinances governing short-term rentals.

Under the prior law, violations were subject to a maximum fine or penalty of $100 for the first violation, and $500 for each additional violation of the same ordinance within the same year. With the passage of SB 60, a violation of an ordinance relating to a residential short-term rental that poses a threat to health or safety can now be subject to a maximum fine of $1,500 for a first violation, $3,000 for a second violation of the same ordinance within one year, and $5,000 for each additional violation of the same ordinance within one year of the first violation. The law was designated as an urgency statute and took effect immediately.

SB 60 was aimed at deterring abuse of short-term rental laws and was in part prompted by two deadly tragedies that occurred at rented party houses in 2019 and in August 2021, just before the law was passed. Concerns with neighborhood preservation, traffic, trash, and noise complaints have made short-term rentals the subject of heavy regulation in years past. Cities across the state have been grappling with how to handle the spike in short-term rentals. Some cities have banned them altogether, while others have required permits, imposed taxes, noise ordinances, and guest occupancy rates. The steep increase in fines permitted by SB 60 may help improve issues with compliance that have plagued local governments efforts to mitigate the negative effects of short-term rental properties.

Another significant aspect of the statute is its definition of a short-term rental as a private residential dwelling, or any portion of such a dwelling, that is rented to a person(s) for 30 consecutive days or less. Commercially operated hotel, motel, bed and breakfast inn, and time-share properties are specifically excluded from this definition for purposes of this statute.

The statute provides that governing bodies must establish a process for granting a hardship waiver to reduce the amount of the fine if the responsible party demonstrates that they made a bona fide effort to comply after the first violation and that payment of the full amount of the fine would impose an undue financial burden.

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