In the latest round of bad news for Las Vegas condo-hotels, condominium owners at the Meridian Luxury Suites, just off the Strip, have been ordered to stop renting out their units to short-term renters, according to the Las Vegas Review Journal.

It seems that the property was never licensed to operate as a condo-hotel, and by renting out units for stays of less than one month, the development was effectively running an illegal hotel operation, according to the County. Of the 678 condominiums, ranging from studios to two-bedrooms, only 12 were occupied by full-time residents, while the vast majority of the other units were placed into a rental pool and marketed to short-term guests (Expedia.com gave the property three and a half stars).

According to the Review Journal, the number of units in foreclosure has grown to 80 and the property has run up a tax bill of more than a half million dollars since the operation was called out and owners have lost the ability to cover part of their ownership costs through short-term rentals. The property is currently trying to secure the proper licenses to allow short-term rentals.

While the move to shutter an entire hotel is extreme, it shows that more towns are focused on reigning in short-term rentals and looking to ensure that owners renting out vacation homes are paying the proper transient, or hotel, taxes. Vacation rentals have boomed in recent years and sites like VRBO.com claim 100,000 rental listings—with close to 400 listings in Las Vegas alone. With the rise of do-it-yourself rental sites, the growth of second home ownership and now, perhaps, a slumping real estate market where homes for sale are being rented out, the issue of short-term rentals has landed squarely in the center of local planning commissions and boards in vacation hot spots like Santa Fe, Napa Valley, Kauai and Miami Beach, where the town Planning Board relaxed short-term rental rules last week.

So what does this mean for condo-hotel buyers, or vacation home owners looking to put their houses to work? Condo-hotel buyers, more than ever, need to do their due diligence before making a purchase in this real estate downturn. Vacation home owners should expect the short-term rental issue to come to a local planning commission agenda near them soon. Owner rental sites may make it seem that getting into the landlord business has minimal costs, but increasingly towns—cracking down on rental permits and the payment of occupancy taxes—beg to differ.