What are the Regulations and Restrictions Related to Short-Term Rentals (e.g., Airbnb) in Merced County?

Short-term rentals have become an increasingly popular way for people to earn extra cash or offer affordable accommodation to travelers. Many rental property owners have decided to test the waters, even if they’ve traditionally rented out long-term homes to stable tenants with a lease for at least a year. 

Merced and the surrounding area is an ideal place for short-term rentals. There are schools and businesses here that attract people for a week or more. When those travelers don’t want to stay in a hotel, a short-term rental or a vacation home is exactly the right fit. It provides privacy and extra space - a home away from home. 

The fact that this market is so ideal for short-term travelers only makes the short-term rental opportunity more attractive to owners and investors. Platforms such as Airbnb, Vrbo, and HomeAway make it easy for homeowners to rent out their properties and earn income, even if they’re only renting out a room in their home. 

However, there are also local regulations and restrictions that must be considered. If you plan to offer your property as a short-term rental in Merced County, it's important to understand the rules to avoid any legal issues. The County does regulate the way these properties are advertised, rented, and zoned. Owners must follow all habitability standards, tax laws, parking standards, and rules around quiet hours. 

At Wisdom Property Management & Realty, we’ve been helping owners with both long-term and short-term investment properties. We can help you avoid legal hiccups and all the risks and liability that come with such an endeavor. 

Let’s talk about what you need to know before you dive into short-term rentals. 

Understand Merced County Zoning Laws

The Merced County Zoning Code covers short-term rental properties in Title 18, Chapter 18.60.270. Most residential areas in Merced County are zoned for short-term rentals, even including some agricultural areas. Most residential areas are zoned for single-family homes, which means that renting out a room or a guest house on the same property as your home is usually allowed. However, if you own a property in a commercial zone, short-term rentals are often prohibited.

You’ll need to understand the occupancy limits, the time limits, and the long list of requirements that come with a short-term rental. For example, a short-term rental is defined as lodging that’s rented out to a guest for 30 days or less. You’re required to have a local contact person available to respond to problems and emergencies 24 hours a day. No more than five bedrooms can be provided to guests at a time. You’ll have to provide off-street parking and enforce quiet hours from 10PM until 7AM.

Get to know this part of the Zoning Code before you rent out a short-term property.

Apply for a Business License and Permit

Before you start renting out your property on platforms like Airbnb, you'll need to apply for a permit from the Merced County Planning Department. This will essentially provide you with a business license, which you’ll need to be granted within 30 days of renting out a property to short-term guests. 

There are fees associated with applying for a permit, and the process can take several weeks. 

Understand the Transient Occupancy Tax (TOT)

Collecting taxes is required for short-term rental property owners because you’ll be expected to pay them quarterly. 

Short-term rentals in Merced County are subject to Transient Occupancy Tax (TOT), which is a tax on the rental of hotel and motel rooms. As a short-term rental owner, you're responsible for collecting this tax from your guests and remitting it to the county. Failure to do so can result in fines and penalties. The current TOT rate in Merced County is 10%, and it’s due on the last day of the month following the end of a fiscal quarter. If you don’t submit your paperwork and your payment on time, you’ll be served a delinquency notice which will include penalties and interest payments. 

Understand Liability Issues

Every investment comes with its own risks, and as a short-term rental owner, you may be looking at some additional liability simply because of the nature of your business. No one wants to think about those worst-case scenarios, but you could be held liable for any injury or damage that occurs on your property. 

Think about this when you’re putting protections into place for your investment. It's important to have adequate insurance coverage and to inform your guests of any potential hazards on the property (such as swimming pools or steep staircases). Additionally, you will be subject to noise ordinances, which restrict the amount of noise that can be generated on your property. You’re required to state in your advertisement and your rental agreement that quiet hours are from 10PM until 7AM.

Be a Good Neighbor