The Town of Falmouth is considering new requirements for short-term rentals that would significantly change how vacation properties operate in the area. If approved, the bylaw would take effect January 1, 2027, and establish licensing requirements and occupancy limits. The proposal comes as a recommendation from the Short-Term Rental Advisory Committee that studied the issue over the past year.
According to the proposal, the bylaw aims to create uniform regulation while protecting neighbors from nuisance conditions. It’s designed to maintain neighborhood character, ensure rental safety, preserve year-round housing stock, and prevent large corporations from dominating Falmouth’s rental market.
“After decades of managing short-term rentals and serving on the Short-Term Rental Committee, I’ve had a front-row seat to the conversations behind these proposed bylaws. A lot of time and thought has gone into this, and I truly believe the committee worked hard to strike a fair balance. The goal is clearer standards and a smoother process, while continuing to support responsible owners.”
Kara Foley
Broker Associate REALTOR®
Key Requirements
Under the proposed bylaw, all short-term rental operators would need to obtain a license from the town which would be valid for 2 years. The licensing process requires submitting detailed information including proof of ownership, parking and trash plans, emergency contact information, and various safety certifications. Applicants must show at least one parking spot per bedroom and provide contact information for some with 24-hour availability.
Occupancy would be capped at two times the number of bedrooms. requires a designated “Operator” who lives within 20 miles and can respond to emergencies 24/7. Off Cape owners will need to be particularly mindful of this requirement
Ownership and Property Restrictions
Just as other Cape municipalities have approved or are considering similar restrictions, this bylaw would limit the number of short-term rental licenses a single owner can hold to three. The same limit applies if ownership is held via LLC (Limited Liability Company).
The bylaw specifically prohibits several types of properties from operating as short-term rentals, including affordable or income-restricted housing units, timeshares, fractional ownership properties, and properties owned by C-corporations, S-corporations, nominee trusts, or real estate investment trusts.
Other Restrictions
The regulations prohibit using short-term rentals for events that charge admission or advertise attendance. Properties can only be rented to individuals, not to entities or organizations. The bylaw also forbids renting non-habitable spaces like unfinished basements or garages as part of a short-term rental.
Enforcement and Penalties
The town would have significant enforcement powers under the proposed bylaw. The Board of Health, Fire Rescue, and Building Department could conduct inspections, and property owners must provide access for safety checks. Refusing inspection access would invalidate the license until compliance is achieved. Violations could result in fines of $300 up to $5,000 per day.
Keep in Mind- State and Local Tax Requirements
All short-term rental operators in Massachusetts must already comply with existing state and local tax requirements since 2019. This legislation amended Massachusetts General Law Chapter 64G to extend the room occupancy excise tax (hotel/motel tax) to short-term rentals. Under this existing law, operators must register with the Massachusetts Department of Revenue, and properties rented for more than 14 days in a calendar year are subject to the state excise tax of 5.7%, plus local option excise taxes. The proposed bylaw in Falmouth references compliance with these existing state registration and taxation requirements.
Next Steps
The proposed bylaw will be reviewed by the Select Board and ultimately may be voted on at the Annual Town Meeting on April 6, 2026. Click here to view the short-term rental bylaw draft.