Info Tech-July/August 2012

Short-term rentals and the MLS
With the DNC coming to town, think about what you need to consider

By Debbie Wey, Assistant Director, CMLS Policy

 

Does the Carolina Multiple Listing Services, Inc. (CMLS) allow listings of short-term rentals, like for the Democratic National Convention (DNC)?

The “CMLS Rules and Regulations” do not prohibit the listing of short-term rentals in the MLS, but there are no plans to modify our system to further accommodate short-term rentals.

Are DNC rentals subject to the North Carolina Vacation Rental Act?
Maybe.  The North Carolina Vacation Rental Act defines a Vacation Rental as the rental of residential property for vacation, leisure, or recreation purposes for fewer than 90 days by a person who has a place of permanent residence to which he or she intends to return. The act does not apply to rentals to persons temporarily renting a dwelling unit when traveling away from their primary residence for business or employment purposes.

What type of listing agreement should be used for DNC rentals?
The “CMLS Rules and Regulations” require all MLS listings, including DNC rentals, to be subject to an exclusive listing agreement. However, the North Carolina Association of Realtors® (NCAR) has not developed a standard form for listing a residential rental only to find a renter, without also acting as a property manager. NCAR has listing forms for long-term residential rental property (Standard Form 401) and vacation rental property (Standard Form 402), but not short-term rental property.  Commercial Form 572, “Exclusive Right to Lease Listing Agreement,” is not designed for residential listings.  Brokers should seek legal counsel in drafting an exclusive listing agreement specifically for DNC rentals.

What type of rental agreement should be used for DNC rentals?
The “Agreement to Procure Tenant” form (Standard Form 101) can only be used in conjunction with the Exclusive Right to Sell Listing Agreement, and cannot be used as a standalone form.  The six-page Residential Rental Contract (Standard Form 410-T) provides options for monthly, weekly, yearly and other lease terms; however, the contract is written for long-term rentals. The three-page Vacation Rental Agreement (Standard Form 411-T) is only suitable if DNC rentals are subject to the N.C. Vacation Rental Act. Again, brokers should seek legal counsel in drafting a suitable rental agreement for DNC rentals.

Are DNC rentals listed in the MLS required to offer cooperative compensation?
Yes! Cooperative compensation must appear as a percentage of the gross rent price or a definite dollar amount.  The owner in the listing agreement must authorize the listing brokerage to offer cooperative compensation to other CMLS Participants acting as subagents or tenant representatives.

Do homeowner associations allow short-term rentals?
If the property is subject to a homeowner association or restrictive covenants, homeowners should check to be sure short-term rentals are allowed.

Are DNC rentals subject to sales tax?
Brokers and owners should consult with a tax advisor.

Also, don’t forget!
Member Participants and Subscribers must disclose in the listing if they are the owners of or have an ownership interest in the property submitted to the service. Subscribers must sign an agency agreement with the listing brokerage when listing their own property in the MLS.

Are you competent?
Article 11 of the Realtor® Code of Ethics says the services which Realtors® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage … Can you competently offer to rent a property on behalf of another?

  • Offering to rent a property on behalf of another constitutes real estate brokerage.
  • All agency agreements must be in writing.
  • Fair housing language must be included.
  • Do you know the rules regarding tenant security deposits, handling rental income and the Residential Rental Agreements Act?
  • Does the owner expect you to perform the duties generally associated with property management, such as performing a background check on the prospective tenant, collecting rent, negotiating lease terms and determining fair rental rates; and are these duties addressed in the agency agreement?
  • How will you disclose your agency relationship with the landlord to the prospective tenant?

Want to know more?
Try contacting a few brokers in High Point, where short-term rentals are common during The High Point Market, to learn how they handle short-term rentals.