Michigan Court of Appeals Rules That Short-Term Rentals May Violate Single-Family Residential Use Ordinances

Michigan Court of Appeals Rules That Short-Term Rentals May Violate Single-Family Residential Use Ordinances

Jan 16, 2019 | Articles, Bylaws, News, Restrictions and Enforcement, Rules and Regulations | 0 comments

Michigan Court of Appeals (unpublished), Docket No. 342831, Decided October 25, 2018

With the advent of Airbnb and similar services, the issue of short-term rentals has increasingly become a problem for condominium and homeowners associations over the last few years. Most governing documents do not directly deal with this issue, so associations are looking for other ways to control this activity. By finding that short-term rentals violate zoning ordinances that restrict the use of property to “single-family residential,” Michigan courts are providing a way to restrict or prohibit this activity that does not require an amendment of the association’s governing documents.

The Michigan Court of Appeals held that absent specific language to the contrary in a municipal zoning ordinance, property located within an area which limits use to “single-family residential” may prohibit “short-term rentals.”

Concerned Property Owners of Garfield Township, Inc. (“Property Owners”), is a Michigan corporation comprised of individual owners of real property located around Silver Lake in Garfield Township, a popular vacation destination near Traverse City in northern Michigan. The property at issue is located within Garfield Township’s “R-1B” zoning district, which limits property use to “single-family residential” purposes. Prior to 2015, the Property Owners used their properties as vacation rentals, allowing third parties to lease their homes, usually for periods of one week at a time.

In 2015, Garfield Township amended its zoning ordinances and, in doing so, it specifically prohibited short-term rentals in single-family residential zoning districts, thus preventing the Property Owners from leasing their properties for periods of less than 30 days at a time. The Property Owners filed suit, claiming that short-term rentals were permitted under the municipality’s pre-2015 zoning ordinance and, as a result, their properties could continue to be used for this purpose under the doctrine of “prior nonconforming use.”

“A prior nonconforming use is a vested right in the use of particular property that does not conform to zoning restrictions, but is protected because it lawfully existed before the zoning restriction’s effective date.” Lyon Charter Twp v Petty, 317 Mich App 482, 489; 896 NW2d 477 (2016). Thus, if short-term rentals were permitted under the pre-2015 zoning ordinance, the Property Owners can continue to use their properties for this purpose, notwithstanding the fact that the ordinance was amended in 2015 to specifically prohibit short-term rentals in single-family residential zoning districts.

The trial court ruled in the municipality’s favor, finding that short-term rentals were prohitibed under the pre-2015 ordinance. The Property Owners appealed this decision to the Michigan Court of Appeals.

The Court of Appeals, in an unpublished decision dated October 25, 2018, affirmed the trial court’s ruling, finding that short-term rentals were not permitted under the pre-2015 ordinance and, thus, such use does not qualify as a valid prior nonconforming use. Specifically, the pre-2015 ordinance defined “single-family dwelling” as a “dwelling unit designed for exclusive occupancy by a single family which may be detached or semi-detached,” and it defined “dwelling unit” as a “building or portion thereof designed exclusively for residential occupancy by one (1) family, and having cooking facilities.” In addition, under the pre-2015 ordinance, the definition of “family” included relationships of a “non-transient domestic character,” but specifically excluded those “whose domestic relationship [was] of a transitory or seasonable nature or for an anticipated limited duration of a school term or other similar determinable period.”

Next, the Court noted that the pre-2015 ordinance did not define the terms “residence” or “residential occupancy”; however, when a term is not specifically defined in the body of a statute or ordinance, it is appropriate to define that term in accordance with its “ordinary meaning.” The Court found that the term “residence,” as commonly used, excludes uses of a “transitory nature.” Citing O’Connor v Resort Custom Builder, Inc, 459 Mich 335, 345-346; 591 NW2d 216 (1999), the Court held that a residence “is a place where someone lives, and has a permanent presence . . . as a resident, whether they are physically there or not. Their belongings are there. They store their golf clubs, their ski equipment, the old radio, whetever they want. It is another residence for them, and it has a permanence to it, and a continuity of presence . . . that makes it a residence.” Accordingly, a third party’s use of the property as a short-term rental does not fit within the definitions of “residence” or “residential occupancy.”

In short, the Court held that under the pre-2015 zoning ordinance, “the use must have been more than transitory, evidencing an intent to establish a permanence to the occupant’s presence there.” The Court concluded that “[b]ecause the weekly short-term rentals in this case do not establish the type of permanence needed to establish a single-family dwelling,” the Property Owners’ pre-2015 use of their properties as short-term rentals did not qualify as a valid prior nonconforming use. As a result, such use violates an ordinance that limits property use to “single-family residential” purposes.