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Zoning Restrictions on Short-Term Rentals (Airbnb and VRBO) and Lakefront Properties

The demand over the past 10 years spiked on platforms like Airbnb and VRBO, which connect homeowners with short-term renters.

During the summer season in Michigan, for example, there is a high demand for lake houses. Lake houses allow for the perfect getaway while avoiding the traditional, commercial destination (like hotels and motels).

Understandably, many citizens oppose the increase of homes used for short-term rentals. After all, who wants to have a “new” neighbor every couple of days?

Accordingly, townships, cities, and villages reacted by passing zoning ordinances to address the issue, especially in the past 3-5 years. These ordinances either prohibit or impose restrictions on short-term rentals (click here for an example).

House Bill No. 4722, Proposed Amendment to the ZEA

Generally speaking, the Michigan Zoning Enabling Act (ZEA) allows local governments to pass and enforce these ordinances.

The ZEA gives local governments the authority to regulate land use and establish zoning districts. However, if House Bill No. 4722 becomes law, many of these local restrictions will be deemed invalid.

HB No. 4722, as passed by the House of Representatives on October 27, 2021, prohibits local governments from disfavoring short-term rentals. It would prevent local governments from treating homes offered for short-term rentals differently from other homes within the same zoning.

To illustrate, if other single-family lake houses are allowed as-of-right in a zoning district, then using a single-family home as a short-term rental cannot be categorized as a special use. Similarly, local governments will no longer be allowed to require a permit or some form of approval/license prior to engaging in a short-term rental transaction.

HB No. 4722 provides several exceptions and allows local governments to place a cap on the number of homes being used as a short-term rental. Many believe that such a cap, and the manner in which it will enforced, will lead to litigation.

We will be following HB No. 4722 and this issue closely. In the meantime, if you have any questions or concerns, feel free to reach out to the attorneys at Dalton & Tomich, PLC.

 

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