If you rent out your home in Massachusetts (even occasionally) a recent federal court decision out of the District of Massachusetts should be on your radar. A recent case handled by Melick & Porter attorney, William P. Rose addresses when the state's $1,000,000 liability insurance requirement for short-term rentals actually applies, and when it does not.
The Background
Our clients own a home in Dennis, Massachusetts, which they listed on WeNeedAVacation.com. During the early months of the COVID-19 pandemic, a family reached out about renting the property. At that time, Governor Baker issued an executive order prohibiting short-term rentals across the state. Under implementing guidance from the Department of Public Health, a "short-term rental" meant a rental of thirty-one days or fewer.
Since our clients knew about the restriction, it was explained to the prospective renter that rentals of thirty-one days or fewer were not permitted, but that a rental of thirty-two days or longer would be considered a long-term rental, and would not be affected by the order. Agreeing to a thirty-two-day rental period but the renter was not charged extra for the additional day.
During her stay, the plaintiff (the renter's mother) was walking across the pool deck when the boards gave way beneath her, causing her to fall and sustain injuries. She sued the homeowners and the website operator, bringing claims for negligence, negligent misrepresentation, and violations of Massachusetts' consumer protection statute, Chapter 93A.
The Insurance Issue
One of the plaintiff's theories was that the owners violated Chapter 93A by failing to carry $1,000,000 in liability insurance as required by Mass. Gen. Laws ch. 175, § 4F. That statute, which was relatively new at the time, required that level of coverage for operators of "short-term rentals." The owners carried a $500,000 policy on the property.
Melick & Porter moved for partial summary judgment on this specific claim, arguing that Section 4F simply did not apply because the rental was not a "short-term rental" under the statute.
The Decision
The Court agreed with Bill. While the statutory definition of "short-term rental" does not spell out an exact time limit, the Court found that the undisputed facts made the answer clear in this case. The parties specifically negotiated a thirty-two-day rental term to comply with the Governor's COVID-19 order and The Department of Public Health and the Attorney General's office had both interpreted the relevant statute to define short-term rentals. Because this rental exceeded that threshold, Section 4F's insurance requirements did not apply, and the plaintiff's Chapter 93A claim failed.
What This Means for Property Owners
For anyone renting out property in Massachusetts, this decision offers a few points.
First, the $1,000,000 insurance requirement under Section 4F applies only to short-term rentals. A rental that exceeds thirty-one days, even one structured that way to comply with regulatory restrictions, falls outside the statute. Second, a consumer protection claim under Chapter 93A requires proof that the alleged conduct actually caused a real injury. A theory built on what might happen in the future is not enough.
The case is a reminder that understanding the regulatory landscape and structuring rental agreements thoughtfully can make a meaningful difference when disputes arise.
To learn more about how this decision may affect your rental property, reach out to our team.
