Loophole Myth

For a few years, the owners of illegal vacation rentals/B&B lodges and some unscrupulous Realtor agents have propagated the myth that there are “loopholes” that enables them to provide less than 30 day stays in residential zoning. They have told their guests and potential vacation rental investors that it is legal to provide less than 30 day stays to vacationers as long as you create a 30 day lease or you only rent to one group of visitors every 30 days.

This is false! There are NO LOOPHOLES!

The land Use Ordinances of the City & County of Honolulu prohibits residential-zoned property owners from “providing” a dwelling unit or lodging unit for compensation to transient occupants for less than 30 days unless a property owner has obtained and kept current a non-conforming use certificate (NUC) for such use. Furthermore, there is no LUO or administrative policy “loophole” that allows residential properties to be rented for less than 30 days regardless if the property is being offered only once a month or has only been rented twelve times or less in a calendar year.

If a residential-zone property owner is intently or knowingly providing transient accommodations for less than 30 days without a NUC, they are violating the law. This would include owners who create “fake” one-month leases or those who collect rent for a 30 day period and then rebate the guests when they leave prior to the 30 days lease expiration knowing the guests had no intention to occupy the accommodations for 30 days.

If the City and County of Honolulu is given evidence that proves a residential property owner or their agent intently or knowingly provided transient accommodations for less than 30 days, the property shall be treated as an illegal-use and a notice of violation will be issued. If the violation is not corrected, a notice of order will be issued and the property owner will be subjected to fines of up to $1000 per day until the violation is corrected.

Example 1: Vacationers contact a property owner or an agent who is offering a vacation rental without a NUC in a residential-zoned neighborhood and request accommodations for fifteen days. The property owner agrees to provide them with accommodations for the fifteen days and has not rented the same property to another party for 15 days prior or after. The vacationers provide evidence to the City that they requested, compensated and occupied the property for only 15 days. Since the property owner intently or knowingly provided less than thirty day accommodations for compensation, a violation has occurred regardless that no other party was occupying the property during a 30 day period.

Example 2: Vacationers contact a property owner or an agent who is offering a vacation rental without a NUC in a residential-zoned neighborhood and request accommodations for two weeks. The property owner agrees to provide them with accommodations for the two weeks, but creates a 30 day contract. The vacationers provide evidence to the City that they requested, compensated and occupied the property for only two weeks. Since the property owner intently or knowingly provided less than thirty day accommodations for compensation, a violation has occurred regardless that a 30 day contract was created. The contract is only evidence and as such could be nullified by other evidence.

Any non-NUC property owner who is intently providing less than 30 day stays to paying vacationers is breaking the law. Using the excuse that they can not control how long a guest will occupy a vacation rental is also not a valid excuse if they are aware that the occupants have no intention to occupy the property for 30 days.

The Director of the Department of Planning and Permitting issued an official Declaratory Ruling confirming  there are no loopholes. See Declaratory Ruling.

Bottom-line: Honolulu Ordinances clearly state “providing” less than 30 day stays in residential zoning violates the laws.

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