Guest Column

Short-term vacation rentals battered in Michigan

July 13, 2018
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Planning to rent a cottage this summer so your family can enjoy a little “Pure Michigan” time on the beach?

That may be harder to do this year as Michigan’s municipalities and courts continue to clamp down on short-term vacation rentals. While several states protect the rights of homeowners to rent their homes as vacation rentals, Michigan has not.

Michigan has become a patchwork of zoning and other regulations as municipalities struggle to come up with equitable answers. The rules can vary dramatically for homeowners from South Haven to Holland to Traverse City — and that makes the future for vacation rentals pretty bleak.

Short-term rentals have been challenged for the last several years, prompted by the rise of Airbnb, VRBO, HomeAway and other online sites that enabled homeowners to directly connect with guests and “turn rooms” much like hotels and resorts do. While bed-and-breakfasts long have been recognized as special uses under most zoning ordinances, short-term rentals largely have been ignored.

This has led to a clash of interests between people who want to rent their homes to cover expenses or to generate income with neighbors who complain about the influx of “short-timers” who may not have the same care or consideration as full-time property owners.

Complaints abound over renters who violate noise ordinances, leave trash in the yard and generally behave poorly while on vacation. This has put an unfortunate spotlight on an issue that municipalities are trying to fix via ordinances.

Holland recently established a two-year pilot program that limits the number of short-term rentals in the city and mandates a buffer zone. A month into the program, Holland has filled fewer than half of available spots. Holland commissioners had wrestled with the short-term rental question for years, worried that opening the door might lead to an explosion of short-term rentals that neighboring South Haven has seen.

For its part, South Haven put in place a six-month moratorium on approving new short-term rentals before the start of this year’s summer beach season. City commissioners wanted the chance to study their options before adding to the 400-plus homes currently registered as short-term rentals.

Traverse City was poised in mid-June to change the rules governing its tourist home policy, but commissioners punted the decision into July. After 18 months of discussion, commissioners had been set to vote on new rules that would create high-intensity and low-intensity tourist homes, although they appear ready to establish an ad hoc committee to further study the question.

When they are not a ban or effective ban, short-term rental ordinances often try to regulate the number of guests and the length of their stay. Additionally, they tackle issues such as:

  • Number of cars, boats or “toys” allowed

  • Noise levels

  • Usage, including receptions or parties

  • Buffer zones

Beyond legislative impediments to short-term rentals, homeowners with restrictions in their chain of title face additional barriers to renting. In a string of several unreported cases from 2004 to 2017, Michigan’s Court of Appeals held that short-term rentals violate deed covenants restricting property to residential uses. Courts have found additional restrictions prohibiting commercial uses in a residential neighborhood only bolster the conclusion that short-term rentals were never intended.  

An amendment to the Michigan Zoning Enabling Act introduced in April 2017 seeks to eliminate some of the barriers localities have created for short-term rentals through zoning ordinances, but the legislation has stalled in committee.  It is not clear what, if any, impact such legislation would have on the court opinions.

If you are in the market to rent short term, you will find your options in Michigan are diminishing yearly. If you are looking for an investment property, it is essential that you raise the issue with your real estate agent and seek professional counsel. If you are struggling in your neighborhood with a constant flow of short-term renters, the law is on your side — at least for the moment.

Brian T. Lang is a partner with Warner Norcross & Judd who chairs the firm’s Real Estate Litigation Practice Group. He can be reached at blang@wnj.com.

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