Overview: Are Short-Term Rentals Allowed in Cape Elizabeth, ME?

Yes, short-term rentals are explicitly allowed in Cape Elizabeth, Maine under the town's comprehensive Short-Term Rental Ordinance (Sec. 19-8-14 of the Zoning Ordinance, effective May 12, 2021, with amendments effective July 1, 2021). The regulations are designed to balance property owners' desire to rent their properties with residents' desire to preserve the peaceful, quiet character of residential neighborhoods.

Cape Elizabeth operates a permit-based system that allows four distinct types of short-term rentals, each with specific requirements, occupancy limits, and operating restrictions. Only one STR type may be operated per property per calendar year, and all operations must comply with safety standards, zoning requirements, and ongoing compliance obligations.

How to Start a Short-Term Rental Business in Cape Elizabeth

Starting a short-term rental business in Cape Elizabeth requires a systematic approach involving several key steps:

1. Property Assessment and Type Selection

First, determine which STR type best fits your property and investment goals:

• Primary Residence Hosted: Owner must be present overnight during all rentals
• Primary Residence Unhosted: Owner not present; limited to 42 days annually
• Seven Acres Plus STR: Properties ≥7 acres; can be hosted or unhosted; up to 182 days annually
• Short Term Rental Adjacent: Non-primary residence on same lot or abutting lot with owner's primary residence; owner must be present; up to 105 days annually

2. Homestead Exemption Verification

For most STR types (except Seven Acres Plus), you must demonstrate you have been granted a homestead exemption for the property under Maine law (36 M.R.S. Sec. 681-689). Apply through the Town Assessor if you haven't already.

3. Permit Application Process

• Submit application through the Online Permitting System or download forms
• Application deadline: January 2nd of the operating year (late applications subject to penalties)
• Complete permit application with all required documentation
• Pay applicable permit fees ($500 Dec 1-Feb 1; $1,000 after Feb 1)

4. Safety Compliance and Inspection

• Schedule required safety inspection with Code Enforcement
• Implement all required safety features (smoke/CO alarms, fire extinguishers, emergency lighting)
• Post building evacuation plan
• Ensure compliance with building codes (IRC and IBC)
• Prepare floor plans showing safety equipment locations

5. Documentation and Agreement Preparation

• Create rental agreement addendum with required provisions
• Establish local contact person arrangements
• Prepare parking arrangements documentation
• Implement record-keeping systems for all transactions

6. Ongoing Compliance Management

• Maintain accurate rental records
• Ensure advertising compliance with permit terms
• Monitor guest behavior and respond to complaints
• Renew permits annually and maintain safety standards

Required Documents, Permits, Licenses, and Guidelines

Primary Permits and Licenses

Short-Term Rental Permit

• Required for all STR operations
• Annual permit valid for calendar year (expires December 31st)
• Permit application deadline: January 2nd
• Late application fee: Double the permit fee plus additional penalties

Homestead Exemption Certificate

• Required for Primary Residence Hosted, Primary Residence Unhosted, and Short Term Rental Adjacent types
• Must demonstrate homestead exemption under Maine law
• Obtained through Town Assessor's office

Required Documentation for Permit Application

Property Information

• Street address and map/lot number
• Directions from public road (if property not on public road)
• Property ownership documentation
• Floor plans showing alarm, fire extinguisher, and emergency lighting locations

Contact Information

• Property owner name and contact details
• Local contact person information (if different from owner)
• Multiple contact arrangements for different time periods

Operational Details

• Calendar year availability dates
• Parking arrangements (onsite or documented off-site agreement)
• Maximum occupancy calculations
• Compliance with Subsurface Wastewater Disposal Ordinance or public sewer verification

Safety and Compliance Documentation

• Building evacuation plan (must be prominently posted)
• Proof of smoke alarm installation (IRC Section R314)
• Proof of carbon monoxide alarm installation (IRC Section R315)
• Portable fire extinguisher documentation (one 2/A or two 1/A required)
• Emergency lighting verification (hardwired with battery backup, one per 1,200 sq ft)

Legal Documents

• Rental agreement addendum (provided to all tenants)
• Documentation of compliance with Off-Street Parking Standards (Sec. 19-7-8)
• Sanitary waste disposal compliance verification

Safety Requirements Checklist

Fire Safety

• Smoke alarms in each bedroom, outside bedrooms, and on each story
• Interconnected alarms throughout dwelling
• Carbon monoxide alarms for properties with attached garages or fuel-fired appliances
• At least one portable fire extinguisher (2/A rating) or two (1/A rating)
• Hardwired emergency lighting with battery backup
• Solar-powered exterior lighting permitted

Emergency Preparedness

• Posted building evacuation plan during rental periods
• Emergency responder contact information
• Local contact person available 24/7 during rental periods

Specific Regulations for Short-Term Rentals in Cape Elizabeth

STR Types and Operating Limits

Primary Residence Hosted

• Owner must be in residence (including overnight) during all tenant stays
• Maximum occupancy: 2 tenants per bedroom + 2 additional (for one additional sleeping space)
• On lots ≤30,000 sq ft: Maximum 8 tenants total; maximum 8 guests; maximum 4 parking spaces
• No annual day limits specified
• Must be within host's dwelling unit, not separate dwelling area

Primary Residence Unhosted

• Owner not present during tenant stays
• Maximum annual operation: 42 days per calendar year
• Same occupancy limits as Primary Residence Hosted
• Requires homestead exemption

Seven Acres Plus STR

• Properties ≥7 acres (abutting land in same ownership may count toward minimum)
• Can be hosted or unhosted
• Maximum annual operation: 182 days per calendar year
• Homestead exemption optional
• No occupancy restrictions due to lot size

Short Term Rental Adjacent

• Non-primary residence with owner's primary on same lot or abutting lot
• Owner must be present during tenant stays
• Maximum annual operation: 105 days per calendar year
• Homestead exemption required
• Cannot operate any other STR on lot or abutting lot during same calendar year

Rental Intensity Requirements

Seven-Day Rental Periods

• Maximum one rental/use per seven-day period for all STR types except Primary Residence Hosted
• Primary Residence Hosted: Maximum two rentals/uses per seven-day period
• If tenancy <7 days, property must remain vacant for remainder of seven-day period
• Any tenancy <30 days constitutes STR operation requiring permit

Occupancy Limits

• Maximum tenant capacity: 2 tenants per bedroom + 2 additional for one additional sleeping space
• Properties ≤30,000 sq ft: Maximum 8 tenants, 8 guests, 4 parking spaces
• On-street parking by tenants/guests prohibited
• No bus parking during any rental period

Advertising Requirements

Permit Number Display

• All advertising must include current STR permit number
• Must state: "[The Short Term Rental] is available for one (1) rental per seven (7) day period [or two (2) for Primary Residence Hosted], and may be rented for a partial week as long as the Short Term Rental remains vacant for the remainder of the seven (7) day rental period."

Prohibited Advertising

• No advertising of STRs without current permit
• No advertising that violates Zoning Ordinance Section 19-8-14

Record-Keeping Requirements

Mandatory Records

• Accurate, up-to-date records of all rental transactions
• Number of tenants and length of stays
• Upcoming reservations
• Must be presented to Town inspection officials within 5 business days upon request

Property and Zoning Restrictions

Multifamily and Multiplex Units

• No STR on lot containing multifamily dwelling unless all units held in common ownership
• No STR on property containing 5+ dwelling units
• Single STR per lot per calendar year only

Parking Requirements

• Off-street parking required per Sec. 19-7-8
• Garage spaces not allowed for tenant use
• Off-site parking requires written agreement at specified location
• On-street parking prohibited

State-Level Regulations (Maine)

Sales Tax Requirements

• 9% Maine State Sales Tax applies to all STR operations
• Airbnb collects and remits this tax on behalf of hosts
• Applies to all rental accommodations regardless of duration or frequency

Homestead Exemption Requirements

• Maine Homestead Property Tax Exemption (36 M.R.S. Sec. 681-689)
• Required for most Cape Elizabeth STR types
• Demonstrates primary residence status

County-Level Regulations (Cumberland County)

No county-specific STR regulations were identified in the provided content. STR operations in Cape Elizabeth are governed primarily by town ordinances with state-level tax requirements.

Contact Information for Local Authority

Code Enforcement Office

• Phone: (207) 799-1619
• Location: Town Hall, 320 Ocean House Road, Cape Elizabeth, ME 04107
• Online Permitting: Online Permitting System
• Hours:
  • Mondays: 7:30 a.m. - 5:00 p.m.
  • Tuesday-Thursday: 7:30 a.m. - 4:30 p.m.
  • Closed Fridays

Town General Information

• Phone: (207) 799-0881
• Address: 320 Ocean House Road, Cape Elizabeth, ME 04107
• Website: Cape Elizabeth Official Website

Code Enforcement Forms and Applications

• Download Link: STR Application forms available through town website
• Online Application: Through Online Permitting System

Assessing Department (Homestead Exemptions)

• Contact: Town Assessor
• Location: Town Hall, 320 Ocean House Road
• Phone: (207) 799-0881

For Permit Inspection Scheduling

• Phone: (207) 799-1619
• Process: Submit complete application first, then call to schedule inspection

Source Links

Primary Regulatory Documents

• Cape Elizabeth Short Term Rental Ordinance Standards
• Cape Elizabeth Short Term Rental FAQ

Application and Forms

• Online Permitting System
• Code Enforcement Forms & Applications

Related Town Resources

• Town Ordinances
• Fee Schedule
• Board of Zoning Appeals

State References

• Maine STR Ordinance Examples (Legislature Document)
• Maine Sales Tax Information

Important Notes for Investors

• Cape Elizabeth STR regulations are subject to amendment by Town Council
• Permit fees and procedures may change annually
• Property-specific compliance issues may require professional consultation
• Enforcement actions can result in permit suspension or revocation
• Consider engaging local legal counsel familiar with Cape Elizabeth zoning regulations

This comprehensive guide provides the essential framework for operating a compliant short-term rental investment in Cape Elizabeth, Maine. Investors should verify current regulations and requirements before making investment decisions, as local ordinances may be updated periodically.