Alameda's New Short-Term Rental Rules Protect Current Hosts. The Protection Doesn't Transfer When the Home Sells.

"This exception shall not apply to subsequent purchasers." That one line comes at the end of the legacy section of Alameda's draft short-term rental ordinance. For anyone buying or selling a home with a backyard cottage, a unit over the garage or a second dwelling on the lot, it matters more than anything else in the ordinance.

The exception lets established hosts keep operating under rules that new hosts can't use. It belongs to the host, not the house. When the property changes hands, the seller's established-host status does not pass to the buyer. The buyer gets the unit and whatever legal category the City puts it in.

Where the ordinance stands today

On September 15, 2026, the Alameda City Council introduced the short-term rental ordinance. Mayor Marilyn Ezzy Ashcraft, Vice Mayor Michele Pryor and Councilmember Tony Daysog voted yes. Councilmember Tracy Jensen abstained. Councilmember Greg Boller recused himself because of financial interests in residential property. The ordinance still needs final passage. It is listed as item 5-K on the Council's October 6, 2026 agenda, so the provisions below are the introduced text and not yet law.

Timing affects anyone with a property in escrow or about to list this fall. Existing operators would get a 90-day amnesty period after adoption to apply and come into compliance. The Council also asked staff to report back on the ordinance's effects in January 2028.

What the legacy exception covers, and for whom

The general rule is strict. A short-term rental has to be the host's primary, permanent residence, and the host can't run one on any other property in Alameda. An owner who lives on site can host in their own unit, which the ordinance calls home sharing. They can also host in another unit or space on the same property, called a vacation rental, as long as the property has no more than four dwelling units. Only one unit or space can be rented short-term at a time.

ADUs have their own rule. Any dwelling unit "created as or converted to" an ADU or JADU can't be used as a short-term rental unless the host lives in it as their primary residence.

The legacy exception covers hosts who have run a short-term rental for at least one year immediately before adoption. As long as they get and keep the required permit, they are exempt from two rules. First, an owner-host doesn't have to live on the property being rented. Second, the host can rent out an ADU or JADU they don't live in, but only if it was created before 2017.

On a sale, both exemptions end. The new owner falls under the general rule. If the buyer won't live on the property, they can't host there. If the cottage is a legal ADU and the buyer lives in the main house, the cottage can't be a short-term rental, even if it has been booked steadily for years.

What actually transfers is the unit's legal category

Since rental history doesn't carry over, the question for a buyer is what the unit legally is. Here is how the introduced text sorts the spaces a buyer might come across, assuming the buyer lives on the property as their primary residence:

The third row matters most for Alameda's older housing stock. The ordinance lists "separate sleeping quarters and associated habitable space that is part of or accessory to a lawfully established residential use" as a permitted type of space. A lawful older cottage that was never legally an ADU therefore appears to be in a different position than one built under modern ADU law. That is a reading of the text, though, not a City ruling on any particular property.

The distinction came up in the Planning Board debate. At the July 13 hearing, Board members discussed how state law and the variety of Alameda's historic housing stock make it hard to tell which units qualify. Staff recommended a blanket ban on ADUs, and the Board asked for language separating legally established older secondary units from units built under modern ADU laws. As Alameda Post reported, not every older secondary unit, such as a backyard cottage, counts as an ADU. During public comment, one speaker who has rented a backyard cottage for 12 years asked the City to confirm that historic cottages with separate addresses on the same parcel stay eligible.

The permit application shows how the City plans to sort units. Every applicant has to give the square footage, the number of bedrooms and the type of space. If the space is in an ADU or JADU, they also have to give the date it was established as one. A unit's permit history now affects what it can be used for. Before this ordinance, that history mostly mattered for appraisals and insurance.

What this means for sellers presenting rental income

A seller with a profitable cottage rental will naturally want to show its income in the listing. Under the introduced text, that income comes from the seller's own status as an established host. A buyer would need to qualify on their own, starting from scratch.

Advertising rules add another layer. Once the ordinance takes effect, no one can advertise a short-term rental without an approved City permit, and every listing has to show the permit number. Within seven days after a permit expires, is revoked or is suspended, the holder has to take down all public listings.

Sellers should describe the space accurately and let buyers judge rental potential under their own circumstances. For a buyer who plans to live in the main house, a lawfully established unit that fits one of the permitted categories may still have short-term rental potential. For a buyer who won't live there, the introduced text offers no owner-hosted path. The only option it leaves is a tenant hosting in the unit they live in, with the owner's written permission. In public comment, Alameda appraiser Warren Wong warned that limiting short-term rentals too much could reduce property owners' rights and, potentially, property values. He also supported preventing speculative purchases made only to run vacation rentals.

The Council made its priorities clear. Daysog said residents "did not sign up to have basically a hotel" in their neighborhoods. Ashcraft said nurses and teachers tell her they would like to live in Alameda but can't find a place to rent.

The other ordinance on the same agenda points ADUs toward ownership

Right after the short-term rental item on October 6, item 5-L is final passage of an ordinance that would allow ADU condominium conversions. It uses an option that Assembly Bill 1033 gives cities. Eligible ADUs could be sold separately from the main house as airspace condominiums, with homeowners' associations and binding covenants covering shared areas. The Council introduced it 4–0 on September 15. The draft makes conversion approval ministerial, though it still requires a subdivision map and compliance with state and local requirements. A tenant already living in the ADU would get a right of first refusal to buy it and at least 60 days' advance notice before a conversion goes forward.

Taken together, the two ordinances send ADUs toward long-term tenants and first-time buyers and away from overnight guests. City Planner Tristan Suire called the conversion ordinance "one tool in the toolbox." If you own a legal ADU, that gives you a possible new option to weigh against a short-term use the City is closing off.

What to pull together before an offer or a listing

1. The unit's permit history. Find out whether the second unit was created or converted as an ADU or JADU and in what year, because the application asks for that date.
2. The unit count on the parcel. Vacation rentals by an owner-occupant are limited to properties with four or fewer dwelling units.
3. The property's eviction record. An Ellis Act eviction on any unit in the prior five years makes every unit on the property ineligible.
4. The buyer's residency plan. An application needs a signed affidavit with supporting documents, such as two of the following: vehicle registration, a California driver's license or ID, voter registration, an income tax return, a property tax bill showing the homeowners' exemption, or a utility bill.
5. Confirmation from the City. Ask the City whether an older cottage counts as lawful accessory sleeping space or as an ADU, before you rely on either answer.

Nothing here is legal advice. Since the ordinance isn't final yet, the text adopted on October 6 is the one to check.

Quick answers

Is there a cap on how many nights a year a unit can be rented? The draft and staff recommendation set no annual cap. A short-term stay is defined as 30 consecutive days or fewer.

What does a permitted host have to maintain? At least $1,000,000 in liability insurance, unless the hosting platform already provides similar coverage. The host also has to either live on site during stays or name a local contact who can respond in person within 60 minutes, any time of day. Events, parties and other assembly uses are prohibited.

How much is the permit fee? The ordinance itself doesn't state a dollar amount. The draft leaves the amount to a Council resolution and ties the permit term to the host's City business license.

If you're preparing to sell an Alameda home with a cottage or ADU, or weighing an offer on one, Mike Lane Group can help you collect the permit history and frame the second unit accurately before it goes on the market. Start with a free home valuation, or browse our Alameda neighborhood guide to compare properties block by block.