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March 9 2020

Michigan Supreme Court Agrees to Hear Case on Short Term Rentals

By: Bradley A. Fowler

As reported in an earlier edition of this newsletter, last summer the Michigan Court of Appeals issued a published opinion in the case of Reaume v Township of Spring Lake re-affirming that short-term rental occupation is a commercial use of property that does not fall within the definition of residential single family use.

To recap, the Reaume case involved a property owner who began seasonally renting out her home in the “R-1 Low Density Residential” zoning district in 2015.  In 2016, Spring Lake Township adopted an ordinance expressly prohibiting short-term rentals in the R-1 zone.  After neighbors objected to the plaintiff’s use of the property for short-term rentals, she applied for a short-term rental license, which the Township denied.  She filed suit and took the case all the way to the Michigan Court of Appeals which held that the definition of “Single-Family Dwelling” in the Spring Lake Ordinance “unambiguously excludes transient or temporary rental occupation,” and that the plaintiff’s use of the property for short-term rentals was never permitted under the Township’s R-1 zoning so it was not a lawful non-conforming use.

The Court of Appeals’ ruling in the Reaume case is now in doubt.  In an order issued at the end of November of 2019, the Michigan Supreme Court agreed to consider the case and instructed the parties to submit briefs on the issue of “whether the Court of Appeals improperly relied on the character of the relationship that defines the term ‘family’ in the zoning ordinance in order to conclude that the permitted use of a ‘Dwelling, Single Family’ in the R-1 district does not include short-term rentals.”  The language in the Supreme Court’s Order granting oral arguments on the application for leave to appeal suggests the Supreme Court may take issue with the Court of Appeals’ holding that short-term rentals are not a permitted use in residential zoning districts. 

If the Supreme Court overturns the Court of Appeals’ decision, it could negatively impact the ability of local governments to regulate short-term rental activity through zoning.  Because this case involves the interpretation of ordinance language, if your community’s policy direction is to prohibit or limit short-term rentals, you may want to review, and if necessary amend, your ordinance to provide clear language in the event the Supreme Court overturns the decision.  The case is still pending, and the Supreme Court has invited the Michigan Townships Association and the Michigan Municipal League to file amicus briefs explaining their positions on this issue.  We will continue to monitor this case and update you with new developments as they arise.  In the meantime, please contact one of our local government attorneys with any questions about how this case might impact your community’s short-term rental regulations.