Proposed Bill Would Eliminate Zoning Restrictions on Short-Term Rentals

A recent Bill introduced in the Michigan House seeks to curb restrictions on short-term rentals in areas zoned for residential use. As background, homeowners in certain areas of Michigan have long relied on occasional short-term rentals. However, the proliferation of rentals through marketing by social media and online rental sites has created a boom for the industry, with homeowners in some areas able to rent their home out on a daily or weekly basis for an entire season. This has created a backlash in some circles based on concerns that short-term rentals increase traffic, noise, and other disturbances, and erode the community feel of the neighborhood.

Short-term rentals can be limited in various ways, including restrictive covenants in deeds and homeowner’s association or condominium board bylaws and rules. Zoning ordinances are another way to limit short-term rentals.They may be very detailed, attempting to define a short-term rental and placing restrictions upon such rentals. Or, the zoning ordinances may be general, and simply attach a label such as “single family residential” to a zoning district. Where the ordinance is vague, it is often a question of fact whether the rentals allowed are more characteristic of a residential use of the home or are so substantive that it constitutes commercial activity, which is prohibited by the zoning ordinance.

House Bill No. 4503was introduced to the Committee on Tourism and Outdoor Recreation on April 25, 2017. This Bill seeks to amend Michigan’s Zoning Enabling Act by stating: “(1) For the purposes of zoning, all of the following apply to the rental of a dwelling, including, but not limited to, short-term rental: (A) It is a residential use of property and a permitted use in all residential zones…(C) It is not a commercial use of property.” Combined, subsection 1(A) and 1(C) seek to eliminate zoning restrictions of short-term rentals, including the ordinances which are very specific in nature and those more general in nature, respectively. The Bill also defines short-term rental to mean “the rental of any single family residence or 1-4 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.” Thus, if the Bill is passed, there would be no zoning restrictions on a home in a residential-zoned area being used as a short-term rental. Theoretically, under the Bill, an owner of a house in a single-family residential neighborhood could rent the home out on a nightly basis 365 times a year. The Bill does allow zoning regulations for noise, advertising, traffic, or other conditions, but the restrictions cannot prohibit the rentals.

At present, there are three items to take into consideration for those who would wish to rent out their homes, or those opposed to such rentals. First, this is only a Bill, meaning it has not been passed by the Michigan Legislature and is not yet a law. Second, even if passed, the Bill contains an enactment section which states the amendment takes effect 90 days after it is enacted into law. The obvious intent by the drafter is to not upset the status quo of rentals for the coming 2017 summer. Finally, and likely most important, this Bill addresses short-term rentals only as regulated by zoning ordinances. As stated above, there may still be restrictions on short-term rentals due to restrictive covenants or association or condominium restrictions. Before entering into contracts renting out your home on a short-term basis, we recommend a check of all possible sources of regulations.

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