Truro and Eastham are each considering town meeting articles that would limit how many short-term rental properties one person or corporation could legally own and that would ban “fractional ownership” of residential property outright.
At a public forum on March 4, Truro officials gave an overview of that town’s articles and answered questions.
The first article, which does not yet have a number because it has not been inserted in Truro’s town meeting warrant, would prohibit corporations from holding short-term rental certificates and would allow LLCs, S corporations, and trusts to hold them only if they disclose all of their human owners at town hall.
A second draft article would limit the number of short-term rental certificates any one owner could have to two. Current owners of three short-term rentals would be “grandfathered in” and allowed to continue operating, but owners of four or more would be allowed only to continue with three.
A third draft bylaw would prohibit fractional ownership arrangements of residential property in which the ownership shares are sold to strangers on the open market, as facilitated by companies such as Pacaso and Lifestyle Asset Group.
Short-term rentals are defined (and taxed) under state law as offering stays of fewer than 30 days.
The Lexvest Group, which is based in Maynard, currently offers three single-family homes and three cottages on Shore Road as short-term rentals on the website VRBO.
The company also owns the Prince of Whales cottage colony, which has 17 units, and the Truro Beach Cottages, which has 11. Those rentals are booked through their own websites.
Truro had 459 registered short-term rentals last season, Town Manager Darrin Tangeman told the Independent. The municipal services company Avenu, which offers software that can “scrape” a variety of short-term rental listing sites to find unregistered listings, told Tangeman there were another 27 properties that were not registered with the town.
The draft articles say that their “purpose and intent” is to “protect the time-honored tradition of home rentals in Truro” while also limiting “the conversion of residential units to short-term rentals,” which it says has had a “deleterious effect” on the year-round rental stock.
According to Truro’s draft Housing Needs Assessment and Production Plan, only 15 percent of the town’s occupied housing stock are rental units, which makes the town a “rental desert.”
Considering Truro’s total housing inventory instead of just the occupied units, only 5 percent of the units are occupied by renters, according to the Cape Cod Commission. Twenty-five percent of Truro’s housing units are occupied by their owners, and the remaining 70 percent are either used seasonally or are entirely vacant.
The percentage of Truro’s housing that is fully occupied is lower than in any other town on Cape Cod, according to the commission, and the median sale price for a single-family home is $1.4 million, among the highest on the Cape.
The affordable housing development at Sally’s Way has 16 year-round rentals — and more than 200 families on a waiting list.
Select board chair Kristen Reed said that the number of registered short-term rentals one owner could hold has not been finalized. “The number two could change if that was the will of the people,” Reed said at the March 4 forum. “It could be three. It could be more.”
Forum attendees had questions about the fractional ownership article and how it might affect longtime friends who own property together. Lee Swislow referred to “chosen family” to describe those relationships and said the bylaw’s language about “unrelated persons” might exclude people.
Tollie Miller made a similar point. “For about 25 years, I’ve owned a house in Truro with three of my closest friends, two of whom are married to each other,” Miller said. “I don’t want to discover that because we’ve done this for all these years together — because we could never afford to have a place to share otherwise — that it’s going to get us into trouble.”
Anne Greenbaum, vice chair of the planning board, was moderating the forum; she said that the issue deserved attention. “First of all, you all would be ‘grandparented in,’ but second of all, we need to figure out how to integrate that issue of chosen family,” Greenbaum said.
A ‘Proactive’ Ban
Eastham’s Task Force on Zoning and Regulation recommended both a ban on fractional ownership and a per-owner cap on short-term rentals to the select board. Though the town reports that it currently has no homes under fractional ownership, task force chair Mary Nee said the ban is “a proactive response” to the possibility of single-family homes being bought up in investment schemes.
“This is the first year we’ve looked at fractional ownership as a task force,” said Nee. The select board had asked the task force to examine the subject after Provincetown and Tisbury passed their bans last year.
Eastham’s year-round rental vacancy rate is “virtually zero,” the task force found. Provincetown’s assistant town manager Dan Riviello and community development director Tim Famulare discussed Provincetown’s new bylaws with the task force on Dec. 5.
Nee said that Eastham is especially vulnerable to investors buying up the housing stock because property values are lower than those in nearby towns. Eastham’s median single-family home price was $779,500 in 2023, according to the Cape Cod and Islands Association of Realtors, whereas Wellfleet’s was $965,000, and the median in Orleans was $1,222,500.
“In terms of investment opportunities, we as a community are very attractive,” Nee said.
Select board member Gerry Cerasale raised concerns that groups of friends would not be able to share homes or that the ban would complicate divorce proceedings. Nee assured him that the ban would apply only to corporate entities.
Eastham’s proposed short-term rental bylaw would require corporations to name their human owners, as in Truro’s proposal and Provincetown’s bylaw, and would cap the number of short-term rentals any one person could own or operate at two.
The current draft of the bylaw does not include a “grandfather” clause for people who own more than two, however. Instead, a person who currently owns or operates three short-term rentals would need to choose two that would continue to operate.
The proposed bylaws will be discussed at a public hearing of the planning board on March 20, after which the select board will make an “ultimate determination” on the final draft of the article before the warrant is finalized in early April.
Town Manager Jacqui Beebe will then hold a public meeting on all of the warrant articles ahead of town meeting on May 6.
