April 20, 2018

A Guide to Chicago Airbnb Laws

Beware, Chicago Airbnb, HomeAway and VRBO tycoons, because the carefree days of operating an illegal Chicago vacation rental are over. In 2016 and 2017, Mayor Emanuel and the City Council amended the Municipal Code to better regulate and tax vacation rentals and shared housing units. Not only do the amendments require websites to solicit a Chicago vacation rental license for each listing, they also require Airbnb to regularly report new listings to the city. In August 2017, Chicago’s Department of Business Affairs and Consumer Protection implemented a registration system to enable it to cross-check Airbnb listings against the city’s rolls of licensed vacation rentals. In other words, if you post a listing for a vacation rental and you don’t have a license for the unit, you’re far more likely to get caught now than you would have been in 2015.

At Domu, we don’t take a position on the Chicago Airbnb wars, but we respectfully encourage you to follow the law, and in any case, we don’t want your vacation rental in Chicago to cause you more fines than revenue! Here’s what you need to know about operating a legal Chicago vacation rental:

  1. You must submit an Application and License Fee of $500 to the city (that’s an annual fee).
  2. If your unit is subject to restrictions by a homeowners association or board of directors, you must attest that the association or board has not adopted bylaws prohibiting the use of your unit as a vacation rental.
  3. You must purchase homeowner’s fire, hazard and liability insurance, and general commercial liability insurance with limits of not less than $1,000,000 per occurrence, as mandated by code.
  4. Your unit will be inspected by the City of Chicago Department of Buildings. Additional costs might flow from the inspection in the form of mandated renovations, repairs, and associated permitting fees.
  5. Taxes are now 8.5% of the gross rental or leasing charge (see the Hotel Accommodations Tax in Section 3-24 of the Municipal Code), up from the previous tax of 4.5%.
  6. You’ll have ongoing housekeeping costs, including the maintenance of guest registration records; the provision of soap, towels, linens; and cleaning and sanitizing the vacation rental after each guest departs.

Note that some Chicago aldermen are using zoning laws to prohibit the issuance of new vacation rental licenses from certain precincts. Aldermen Marty Quinn (13th Ward) and Michael Zalewski (23rd Ward) have been particularly active in this regard.

And just in case you were thinking of taking your chances with an unauthorized Chicago vacation rental, please know that being an illegal Airbnb Chicago downtown host could be very costly. MCC § 4-6-300(i)(1) threatens that “[a]ny person who operates the business of vacation rental without first having obtained the required license for such business shall be subject to a fine of not less than $2,500.00 nor more than $3,000.00 for each offense. Each day that a violation continues shall constitute a separate and distinct offense.” Keep in mind that your listing on a peer-to-peer website like VRBO is convincing evidence of your operation of an illegal vacation rental. And if your neighbors are annoyed by the transient guests, they might bring your illegal business to the attention of city authorities or your condominium or homeowner’s association. 

Domu is not a law firm nor is it a substitute for one. This blog provides no legal advice. While we endeavor to provide complete and accurate information, we make no warranties about the information included here. If you have questions about your particular situation, please consult a lawyer.