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June 28 2020

Supreme Court “Upholds” Restrictions on Short-Term Rentals

(What you may have heard on the news is not the whole story)

By: James F. Scales

Last year, the Michigan Court of Appeals decided Reaume v Township of Spring Lake, a case concerning the application of the Township’s zoning ordinance to short-term rentals (“STRs”).  A key issue in the case was the interpretation of the definition of a “single family dwelling,” which in turn incorporated the definition of the term “family.”  The Township’s definition of a “family” excluded “individuals whose relationship is of a transitory or seasonal nature.”  The Court of Appeals construed this to mean that if a group of people occupy a dwelling on a temporary basis (as would be the case for an STR), that group was not a “family” for purposes of defining a single family dwelling, and so STRs would not constitute a single family dwelling, and therefore would not be permitted.

In June, the Supreme Court held that the Court of Appeals got that part of its decision wrong.  It found that the phrase “transitory or seasonal” referred to the relationship of the individuals to each other, not to the period during which they might occupy a dwelling.  So, for example, mom, dad and three young children constitute a “family,” regardless of how long they might be staying in a single family dwelling, including as an STR.

However, the Supreme Court upheld the Court of Appeals’ ruling on an alternate basis:  that the short-term rental of property fell within the Township’s definition of a “motel,” not a dwelling.  Because “motels” were not a listed permitted use in the residential district, the STR was not allowed. 

The decision was reported in the popular media as upholding restrictions against STRs.  However, the ruling did not determine whether STRs are good or bad, or whether it is reasonable to exclude or allow them.  The decision was based on a technical interpretation of the specific language of the zoning ordinance - language which is similar to that used in zoning ordinances in many communities.  The impact of this Supreme Court decision is that now, under many zoning ordinances, the short-term occupancy of a dwelling by a traditional family group would be considered a single-family dwelling use in residential districts.  And unless there is another category of use like the definition of “motel” which defines the use and limits it to a different zoning district, or if there is some other specific provision that applies to temporary occupancy, STRs may be allowed by right in the residential districts.

Communities across Michigan have wrestled with the issue of whether to prohibit STRs term rentals in residential districts, or to permit them with restrictions.  Regardless of the approach your community has taken on STRs, you should have your ordinance reviewed by your attorney to determine the impact of the Supreme Court decision.