Paw Paw Short-Term Rental Regulations

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Permit & Licensing

Business/Rental Property Registration

This permit type does not require primary residence.

Application Process

Register with the Village Clerk on a village-provided form listing property address, tax ID, number of units, owner and applicant contact info, and local rent-collecting/maintenance agent. New registrations are accepted annually between October 1 and December 31; once registered, no re-registration is needed unless the property changes ownership. Registered properties are placed in a rotating inspection pool — about one-third of all registered properties are inspected by the building official each year (all inspected within roughly three years), and a compliance-inspection fee (set by council resolution) is due at Village Hall before the initial inspection. This is a general commercial/rental registration process; the Village has no separate short-term-rental permit or application.

Tax Obligations

Combined rate: 6% of gross rental income.

Filing: Monthly, quarterly, or annual returns as required by the Michigan Department of Treasury

Rental Limits

Paw Paw does not impose an annual cap on the number of nights you can rent.

Zoning & Restrictions

• No short-term-rental-specific zoning use exists in the Village Zoning Ordinance (Ch. 42).
• The closest defined use is "bed and breakfast facility" (a building, other than a hotel, where lodgings and light breakfasts are regularly provided for compensation), which requires a special use permit in the R-1 Single-Family Residential District (Sec. 42-123(2)) rather than being a principal permitted use; general residential zoning otherwise applies to dwellings used for rental.

Insurance & Safety

Insurance

Paw Paw does not require short-term rental operators to carry specific insurance. Standard homeowner policies often exclude short-term rental activity, so many hosts obtain dedicated short-term rental or landlord liability coverage.

Safety & Operating Requirements

• Village code inspection required on registration and thereafter on a rotating basis (about one-third of registered properties inspected annually, full cycle roughly every 3 years), per the 2003 International Property Maintenance Code as adopted by the village
• A certificate of occupancy must be issued by the building official following the first inspection before the unit may be occupied or rented

Penalties for Non-Compliance

• It is unlawful to own, occupy, let for occupancy, or permit another person to use or occupy any structure that has not been registered for inspection or approved, or for which a certificate of occupancy has not been issued (Sec. 8-159)
• General code penalty (where no specific penalty is otherwise stated): fine of not more than $500 or imprisonment of not more than 93 days, or both, per offense; each day of continued violation is a separate offense (Sec. 1-17)

Market Snapshot

Demand context for Paw Paw from official government and tourism statistics — the latest published annual figures, not a projection of rental income.

Figures are the latest annual statistics published by the linked official sources (retrieved 2026-07-13). Visitor counts cover the geography stated by each source, which can be wider than the city itself. Regulations above — not market conditions — determine whether and how you may operate.

Compliance Checklist

Follow these steps to legally operate a short-term rental in Paw Paw:

1. Meet safety requirements. Village code inspection required on registration and thereafter on a rotating basis (about one-third of registered properties inspected annually, full cycle roughly every 3 years), per the 2003 International Property Maintenance Code as adopted by the village. A certificate of occupancy must be issued by the building official following the first inspection before the unit may be occupied or rented.
2. Apply for Business/Rental Property Registration. Submit application. Contact city for fee details.
3. Register for tax accounts. Set up lodging tax accounts with Michigan Department of Treasury.
4. Collect and remit taxes. 6% on all bookings.
5. Renew as required. Contact city for renewal fee details.

Frequently Asked Questions

Do you need a permit to run an Airbnb in Paw Paw?

Yes. Operating a short-term rental — including an Airbnb or Vrbo — in Paw Paw requires a Business/Rental Property Registration.

Does Paw Paw require a short-term rental to be your primary residence?

No. Paw Paw allows non-owner-occupied short-term rentals, so investment properties can qualify provided you hold the required permit.

How many days a year can you short-term rent in Paw Paw?

Paw Paw does not cap the number of nights per year you can short-term rent, though permitting, zoning, and occupancy rules still apply.

What taxes do you pay on a short-term rental in Paw Paw?

Short-term rental stays in Paw Paw are subject to a 6% Michigan Use Tax (Sales & Rentals) - Lodging. Hosts are legally responsible; many booking platforms collect and remit it automatically on the host's behalf.

What are the penalties for short-term rental violations in Paw Paw?

Penalties run up to $500 (see the Penalties section for the full schedule).