Renting out a property in Las Vegas can seem like a lucrative opportunity. The city's vibrant tourism industry has led to a surge in short-term rentals, with approximately 10,000 homes listed for such purposes. However, many rentals operate without proper licensing, rendering them illegal. For instance, as of October 2024, only a fraction of these short-term rentals were licensed, leaving the majority violating local regulations.

Many landlords unknowingly—or sometimes knowingly— end up renting an illegal apartment, thinking it’s harmless as long as tenants pay rent. The reality is far riskier.

This guide breaks down the risks of renting an illegal apartment in Las Vegas, the legal consequences landlords may face, and what steps you can take to avoid costly mistakes. Whether you are unsure about your rental’s legality or considering making adjustments to your property, understanding the rules now can save you from serious problems.

What Makes a Rental Unit Illegal?

Not every apartment or rental unit is legally recognized by the city. It may not be a legal rental, even if it has a bedroom, bathroom, and kitchen.

A unit may be considered illegal if:

It does not have the proper permits. If a space was built or converted without approval from the city, it is not legally a rental.
It violates zoning laws. Some areas do not allow multi-unit rentals in single-family neighborhoods.
It fails to meet safety codes. A unit without proper ventilation, plumbing, or fire exits is considered unsafe.
It is an unpermitted conversion. Basements, garages, or additions not approved for rental use fall into this category.

If your unit falls into these categories, renting an illegal apartment could lead to fines, legal disputes, and even forced tenant relocation. Understanding the rules now can help you avoid costly mistakes.

A. Legal Consequences for Landlords

Renting an illegal apartment might initially seem harmless, but the legal consequences can be severe. If your unit does not meet local housing laws, you are putting yourself at risk for fines, lost income, and lawsuits.

Fines and penalties. Las Vegas has strict zoning and housing laws. If the city catches you renting an illegal apartment, you could face thousands of dollars in fines. The longer you operate illegally, the more you could owe.
Loss of rental income. If tenants realize their apartment is illegal, they may stop paying rent. In many cases, you will have no legal way to make them pay since the lease itself is invalid.
Court-ordered refunds. If a tenant takes you to court, a judge may order you to return all rent collected from the illegal unit. That means months—or even years—of lost earnings.
Eviction headaches. Just because the unit is illegal does not mean you can remove tenants at will. Nevada law still protects them, and improper eviction could lead to more legal trouble.

Waiting to get caught is not a strategy. The best way to protect yourself is to ensure your rental meets all legal requirements before listing it.

B. Tenants’ Rights in an Illegal Apartment

You might assume that the tenant has no legal standing if a unit is illegal. This is not true. Tenants in illegal rentals often have more protections than landlords expect.

A tenant in an illegal apartment may:

Refuse to pay rent. They could have the right to withhold rent payments if the unit is not legally recognized.
Demand relocation assistance. In some cases, landlords are required to help tenants find new housing.
Sue for unsafe conditions. If the unit lacks essential amenities, tenants could take legal action.
Recover their security deposit. Since the unit should not have been rented in the first place, tenants may be entitled to a full refund.

Important Note: Even in an illegal rental situation, tenants have legal protections.

C. Can You Evict a Tenant from an Illegal Unit?

Once a landlord realizes they are renting out an illegal apartment, they may try to remove the tenant right away. But eviction is not always straightforward.

Wrongful eviction claims. A tenant with an illegal rent could sue you if you do not follow legal eviction procedures.
State protections for tenants. Even in an illegal rental, tenants may be protected by Nevada’s landlord-tenant laws.
Eviction costs and delays. A legal battle over eviction can be time-consuming and expensive.

Pro Tip: Before taking action, seek legal advice to avoid worsening the situation.

D. The Financial Risks of Renting an Illegal Unit

Renting an illegal apartment is not just a legal risk—it can cost you thousands and lower your property’s value. What seems like an easy rental income now could lead to major financial headaches later.

Your property value could drop. If you have made unpermitted modifications, like converting a garage into a rental unit, your home may be worth less. Buyers prefer homes that meet zoning codes and pass inspections.
You might struggle to sell. If your property has illegal units, it can scare off buyers or delay the sale. Some lenders will not approve mortgages for homes violating local zoning requirements, making it harder to find a serious buyer.
Lost rent is a real possibility. If a tenant finds out they’re renting an illegal apartment, they may refuse to pay. Since the lease is invalid, you may be unable to take them to court to collect unpaid rent.
Costly repairs can pile up. Bringing an illegal unit up to code—fixing plumbing, electrical, or ventilation issues—can be expensive. The longer you wait, the more it may cost.

Take Note: The short-term rental income is not worth the long-term financial damage. If your unit is illegal, fixing the problem now is better than paying for it later. Be a good landlord and ensure that your rental property requirements comply with state, federal, and local laws.

Avoid Illegal Rental Pitfalls and Partner with Experts!

The risks of illegal tenancy in Las Vegas are too big to ignore. If you are unsure about your rental property’s legal status, let Avalon Realty and Oaktree Management help.

Our team ensures that rental properties meet legal requirements, protecting landlords from fines, lawsuits, and lost income. Do not take chances—make sure your investment is legally secure.

Check our Owner Resources to learn more about landlording laws in Las Vegas, and feel free to message us about your rental property.

FAQs

How can I verify if my rental property in Las Vegas is legally permitted?

To confirm the legality of your rental property, contact the City of Las Vegas Building & Safety Department or Clark County's Department of Building & Fire Prevention. They can provide information on permits, zoning regulations, and code compliance specific to your property's location.

Are there specific neighborhoods in Las Vegas with stricter regulations on rental units?

Yes, certain neighborhoods, especially those governed by Homeowners Associations (HOAs), may have stricter rental rules. Additionally, areas like the Las Vegas Strip and downtown have specific ordinances regulating short-term rentals. It's essential to review local authorities' regulations and HOA rules before renting out your property.

What steps should I take if I receive a violation notice for an illegal rental unit?

If you receive a violation notice, promptly address the cited issues. This may involve ceasing rental operations, obtaining necessary permits, or making required modifications to bring the unit up to code. Consulting with a legal professional experienced in Las Vegas real estate law can help navigate the process and mitigate potential risks.

How Much Does a Las Vegas, NV Vacant Apartment Cost Landlords?

Why Choose Full Service Property Management?

Las Vegas Landlord’s Guide to Squatters Rights