A listing that says "turnkey short-term rental, license in place" is describing the seller's paperwork, not yours. In both the City of Ouray and unincorporated Ouray County, the permit that lets a house collect nightly rental income belongs to the person who applied for it, not the address. When that person sells, the license goes with them. What the buyer inherits is a house that used to be a short-term rental.
That distinction sounds like a technicality until you run the numbers on a property you were counting on to cash flow from week one.
The License Stays With The Seller
The City of Ouray's rules are direct on this point. A short-term rental license is issued to the real property owner and is not transferable. New owners of a previously licensed property have to submit an entirely new application, get placed in the queue by the date the city receives it, and wait for a license to open up under the citywide cap of 120.
Unincorporated Ouray County landed in the same place through a different route. Its current ordinance, adopted in January 2025, ended automatic permit transferability on sale. A buyer purchasing a home that operates as an STR does not inherit the county permit. They apply fresh, under the current caps, like anyone else.
This matters most in a market where both jurisdictions are already close to full. The county's rule sets a hard ceiling of 100 standard permits, split evenly between two license types, plus a separate allowance of up to 25 home-sharing permits outside that count. The city's cap of 120 licenses works the same way: once it's reached, every new applicant goes on a waitlist processed strictly by the date their application arrived.
City Hall Or The Courthouse? Two Rulebooks, Same Outcome
Ouray's original townsite is small enough that a buyer can be a few blocks from city limits and land in a completely different regulatory system. The two don't share a waitlist, a fee schedule, or an application.
| City of Ouray | Unincorporated Ouray County | |
|---|---|---|
| Governing rule | Resolution 12, Series 2021 | Ordinance No. 2024-001 (effective Jan. 2025) |
| Permit cap | 120 licenses citywide | 100 standard permits (50 Type 1 + 50 Type 2), plus up to 25 Type 3 |
| New application fee | $825 | Set by county fee schedule |
| Renewal fee & date | $400, due Feb. 28 annually | Set by county fee schedule |
| Zoning where allowed | R-2, C-1, C-2 only; prohibited in R-1 and all ADUs | Any zone where single-family use is by-right, excluding High Alpine and Public Lands zones |
| Transfers at sale | No. New owner files a new application | No. Ordinance ended automatic transfer on sale |
| 2026 tax change | None new; existing 15% excise tax on non-commercial STR units remains | New 6% Lodging District Tax, effective Jan. 1, 2026 |
Inside city limits, the zoning question comes down to which side of a particular block a property sits on. R-2, C-1, and C-2 parcels are where short-term rental is at least legally possible. Step into an R-1 residential block and the door closes almost entirely, except for a narrow carve-out for uses that were already operating as STRs before July 17, 2019. Even those grandfathered licenses are done the moment the property changes hands.
The Door That Almost Stayed Open
It's worth knowing this wasn't always the plan. Back in December 2018, county planning staff floated language that would have let a buyer step into the seller's short-term rental permit, as long as they applied within 60 days of closing. That draft never became the operating rule. The ordinance the county actually adopted, effective January 2025, closed that path for good. A permit here is tied to the person who holds it, full stop.
A rental license in Ouray is a piece of paper the seller earned by applying, waiting, and passing an inspection. It doesn't ride along in the closing documents.
A Missed Deadline Costs More Than A Late Fee
Inside the city, the mechanics of losing a license are specific enough to matter for anyone buying a currently-licensed property, not just anyone selling one.
Renewal applications are due by February 28 every year, along with proof of insurance and the $400 fee. Miss that date on an R-1 legal non-conforming license and it becomes void, permanently, with no path back. Miss it on an R-2, C-1, or C-2 property and the owner has to file as a brand-new applicant, which means a new date stamp and a trip to the back of whatever waitlist exists at that moment.
New applications also require a passing inspection from the city's building inspector before a license is ever issued. A property that fails that inspection doesn't just delay, it gets moved to the back of the waitlist, dated to the failed inspection rather than the original application. For a buyer weighing whether a fixer-upper with STR potential is worth the renovation timeline, that detail changes the math on how fast income could realistically start.
Ouray County layers on its own operational requirement: every permitted rental needs a designated manager who can be physically present within an hour and lives within 50 miles of the property. That's not a box to check once. It's an ongoing condition of holding the permit at all, and it's one more reason a permit doesn't just transfer along with a set of keys.
The New Tax Line Nobody's Pro Forma Included
Voters in unincorporated Ouray County approved a new 6% Lodging District Tax that took effect January 1, 2026, layered on top of whatever county and state sales tax already applies to short-term stays. The City of Ouray and the Town of Ridgway are exempt from this particular tax because each already levies its own local lodging tax, but any unincorporated county property is now working with a different revenue picture than it had a year ago.
If a seller's income projections are more than a year old, that gap alone is worth asking about before it becomes your problem.
What This Means At The Negotiating Table
None of this means an STR purchase in Ouray is a bad idea. It means the permit and the property are two separate assets, and only one of them is guaranteed to convey at closing.
For a buyer, the practical move is to ask, before writing an offer, whether the relevant jurisdiction (city or county, depending on the address) currently has an open license slot or a waitlist, and how long that waitlist has been moving. A property with STR income in its marketing materials is worth less to you than the same property with STR income and a confirmed, near-term path to your own license.
For a seller, the honest version of the listing describes what the house has produced under the current owner's license, not what it will produce under a buyer's hypothetical one. Marketing a property as "STR eligible" without flagging the cap and the waitlist creates a conversation at closing that nobody enjoys having.
A Few Direct Questions
Does this apply to long-term rentals too? No. Both the city and county rules define a short-term rental as a stay of 30 days or less. Standard annual or seasonal leases aren't part of either licensing system.
Can I apply for a license before I close on the property? The city's application requires the property owner or an authorized agent to submit it, and county permits are tied to the applicant's ownership interest. In practice, most buyers apply once they hold title, which is exactly why the waitlist position and timing questions matter before you make an offer.
What about an ADU on the property? Ouray's city rules prohibit short-term rental use in accessory dwelling units outright. Ouray County requires ADU owners to check with their water provider about additional tap fees before pursuing any rental use, on top of the standard permitting process.
If you're weighing a purchase in Ouray with rental income in mind, or you're getting ready to sell a property that currently operates as an STR, it helps to talk through the specific zoning and permit status before you price anything. Ouray Real Estate Corporation has been at 635 Main St since 1971 and can walk you through what a given address can and can't do under current rules. Let us guide you to your home in Colorado.
