Government, Law, and Travel & Tourism

Legislation would give more leeway to vacation rentals

Proposal aims to curb restrictions on short-term rentals in Michigan residential areas.

June 2, 2017
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Michigan homeowners who have found themselves on the wrong end of a neighbor’s complaint because of using their home as a vacation rental might breathe a little easier next season.

As online listing services — such as Airbnb, Vacation Rentals by Owner and HomeAway — become ever more popular, legislators in the Michigan House and Senate have introduced a pair of bills to curb local zoning restrictions on short-term rentals.

Sen. Joe Hune (R-Hamburg) and Rep. Jason Sheppard (R-Temperance) introduced SB 329 and HB 4503 on April 25 to amend 2006 PA 110, or the Michigan Zoning Enabling Act, which currently leaves short-term rental zoning decisions up to municipalities.

According to Andrew Blodgett, an attorney and shareholder at Smith Haughey Rice & Roegge, the issue has been a hot topic during peak tourist season in Traverse City, where he works. If passed, the amendment also would have implications for West Michigan vacation destinations, such as Grand Rapids, Holland, Muskegon and Ludington, as the law would apply statewide.

“The fact these statewide bills have been proposed underscores the way it is set up right now is a local issue. The Zoning Enabling Act is pretty silent on the issue, so your township and my township are free to act as they want,” he said.

“Different parts of Traverse City have taken different stances on this, let alone Grand Rapids.”

He said he represents clients on both sides of the issue with concerns ranging from the freedom to make extra income to problems with traffic, noise and disturbances in a neighborhood.

“There are people in economic downturns who say, ‘I could be making a lot of money off this.’ You look at Airbnb, and you can make a lot of money.

“On the other hand, it can be a lot of stress on a neighborhood, where someone new is in the neighborhood every night, they’re on vacation, and they don’t care that your kids need to go to bed.”

The bills define short-term rental as “the rental of any single-family residence or a one- to four-family house or dwelling unit, or any unit or group of units in a condominium, for terms of less than 28 days at a time.”

Blodgett said this means each rental per group or individual would be restricted to 28 days at a time, but a homeowner theoretically could book back-to-back rentals 365 days a year.

“The bill does allow zoning regulations for noise, advertising, traffic or other conditions, but the restrictions cannot prohibit the rentals,” he said.

There are a few exceptions that would still apply, including abiding by the restrictive covenants or deeds that prohibit certain uses of a home or condominium in residential developments or neighborhood associations, Blodgett said. This can range from “no fences” to “no livestock” to “no vacation rentals.”

Commercial activity would still be prohibited, Blodgett said, meaning property owners will need to treat their property as their primary residence, effectively not becoming a landlord living off the premises.

“Courts have to define whether (activity) is a commercial use or residential,” he said. “If I am never there and I am renting it out all the time, that’s a commercial business activity. On the other hand, most homeowners like to have guests stay on their property.”

The Senate Committee on Local Government is currently reviewing SB 329, and the House Committee on Tourism and Outdoor Recreation is reviewing HB 4503. 

If the legislation passes, the amendment will take effect 90 days later, so as not to “upset the status quo of rentals for the coming 2017 summer,” Blodgett said.

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