Rules of engagement for short-term rentals on DI

In 2022, the popularity of websites and apps easily allow Daniel Island property owners to rent out rooms and frogs to strangers from around the world for periods of time as short as one night.  Rather than learning how to tax such transactions or ensure that permanent residents do not suffer, local governments, neighborhoods and communities have enacted new rules and laws.  Before we dive into what rules apply, let’s define “short-term rental” (STR).

 

Per City of Charleston Ordinance 54-120, a STR is a conditional use whereby the record owner of a property, who is also a resident of the property, uses one or more rooms on the property for the purpose of providing sleeping accommodations for no more than four adults for a period of time between one and 29 consecutive days. In addition to definitional requirements, there are a number of additional requirements this article will summarize.  

 

Daniel Island is in the City of Charleston and is subject to its laws regarding STRs. For STR purposes, the city is broken up into three categories. Daniel Island is in Category III. If you want to operate a STR and want to avoid running afoul of the law, then you must first apply for and obtain a permit from the City of Charleston.

 

Any property that is not owner-occupied is not eligible for a permit to operate a STR. Thus, if you own the property, but do not live there, then you will not be able to obtain a STR permit. An easy way to figure out where you stand is whether you pay 4% or 6% real property tax in Berkeley County. The 4% rate is the owner-occupied tax rate. The city’s ordinances also include a detailed list of additional requirements, which include:

 

● The record owner of the property must also reside overnight on the property while short term rental guests are present;

 

● On site STR advertising is not permitted;

 

● With the exception of breakfast, no meals may be served by the owner;

 

● The owner must maintain a general liability policy with limits no less than $1 million;

 

● The owner must maintain a guest register with guest names, addresses, telephone numbers and dates of occupancy;

 

● The owner must also comply with business license and revenue collection laws;

 

● The owner must provide a rental packet to guests with various information;

 

● The STR permit number must be listed on all advertisements; and

 

● The owner must not expand beyond the rooms, rental plans or maximum guests allowed by the permit.

 

This list is a summary and anyone pursuing STR should consult the ordinances for additional details.

 

Any rule or law is not complete without a penalty. A violation of the city ordinances regarding STRs can subject the violator to a misdemeanor punishable by a fine and/or incarceration. Also, violations can result in a revocation of the STR permit.

 

The ultimate takeaway is that the city has made STRs a formal process which requires a serious investment of resources by the property owner, thus keeping the occasional or “one-off” short-term landlords out of the market. In closing, if you are involved in STRs then we recommend you carefully review the ordinances and obtain a STR permit.

 

Chris Mingledorff and Michael Patterson are attorneys with Mingledorff & Patterson LLC on Daniel Island. For more information, go to mptrial.com.