Michigan Court Says Short-Term Rentals Not "Residential Use"

Started by CathyA3 • 12 replies • 732 views

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CathyA3 (Ohio)
Posts: 6,299

Posted:

Summary

Two main points addressed by the court:

* "Residential use" involves permanence in a residence, including storage of personal property in the residence. (I'd made a similar comment in the past - basically, if the USPS doesn't think you live there, then you don't live there.)

* Past failure to enforce the restriction against the STR is not a waiver. The court cited the following language in the CC&Rs as important in their ruling in the HOA's favor: "failure by the Association or any owner to enforce any covenant or restriction herein contained shall in no event be deemed a waiver of the right to do so thereafter."

It wasn't clear whether or not the community's CC&Rs actually had a rental restriction that prohibited hotel-style rentals, or if the HOA relied solely on language prohibiting non-residential use. If the latter, then HOAs/COAs without a specific prohibition against STRs may have more options available to them.

AugustinD
Posts: 3,698

Posted:

Is this the Michigan court decision described below:

https://micondolaw.com/2021/11/01/michigan-court-of-appeals-affirms-that-short-term-rentals-violate-hoa-residential-use-restrictions/ ?

CathyA3 (Ohio)
Posts: 6,299

Posted:

That's the one.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Your link included more detail and answered my question about the restriction - the CC&Rs prohibit non-residential use but do not explicitly prohibit STRs.

The article also mentioned that "the court enjoined defendants from renting the property for a period less than six continuous months, presumably on the basis that such a rental is not a transient use but, rather, a residential use."

I also thought this was important:

"Based on pending legislation regarding short-term rentals, deed restrictions will likely take on a more important role in banning short-term rentals. The Michigan House of Representatives recently voted to bar municipalities from completely banning short-term rentals through platforms such as Airbnb or VRBO. Specifically, HB 4722 would amend the Michigan Zoning Enabling Act to prevent Michigan municipalities from completely zoning out short-term rentals. Accordingly, Michigan condominium associations and homeowners associations should review their governing documents to ensure that they contain adequate protections against short-term rentals if HB 4722 becomes law."

The community involved in this lawsuit contained single family homes - it was not a condo community. As I'd mentioned in a different thread, HOAs also need to pay attention to investors snapping up properties and changing the nature of their communities.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Typically CC&R's restrictions read more like not allowing "Frat houses" to be set up in the HOA. Like you can't rent your home out to multiple people at the same time. It's not where you can put out a "Room for rent" sign. It's a little antiquated since we now have Airnb's. That wasn't something our HOA forefather's factored in when developing the boilerplates of HOA's CC&R's. I think this is new terriotory going to have to make more laws like Michigan has to catch up to the "new age".

Former HOA President

AugustinD
Posts: 3,698

Posted:

This is the part I like best:

Quote:

Posted By CathyA3 on 12/31/2021 12:18 PM
* "Residential use" involves permanence in a residence, including storage of personal property in the residence. (I'd made a similar comment in the past - basically, if the USPS doesn't think you live there, then you don't live there.)

On this point, and to elaborate a bit, the 2021 Michigan Appeals Court quoted a 1999 Michigan Supreme Court decision, O'Connor v. Resort Custom Bldrs.:

[W]hat's a residential purpose is the question. Well, a residence most narrowly defined can be a place which would be one place where a person lives as their permanent home, and by that standard people could have only one residence, or the summer cottage could not be a residence, the summer home at Shanty Creek could not be a residence if the principal residence, the place where they permanently reside, their domicile is in some other location, but I think residential purposes for these uses is a little broader than that. It is a place where someone lives, and has a permanent presence, if you will, as a resident, whether they are physically there or not. Their belongings are there. They store their golf clubs, their ski equipment, the old radio, whatever they want. It is another residence for them, and it has a permanence to it, and a continuity of presence, if you will, that makes it a residence.

By contrast, many state courts have said that STRs are still residential use. The interested reader may wish to review the chatter about these others state court decisions at https://www.hoatalk.com/Search/ForumSearch/tabid/87/forumid/1/postid/288125/view/topic/Default.aspx

Aug comment: Before airbnb and the like, I think "residential use" had a certain meaning in city code. All understood that "residential use" meant no hotel-like use. Zoning for residential use implied a certain permanence of residents. Back when the city code was written, I think city councils never anticipated airbnbs and the like.

I like the Michigan appeals courts' definition of "residential use." Three cheers for Michigan.

Little aside on airbnbs: I told a relative recently that I did a lot of airbnb'ing. The relative is not hip on internet driven anything. She asked me from where the phrase "airbnb" came. Wikipedia explains it all. Around 2007, a couple of guys rooming together in San Francisco noticed a shortage of hotel rooms. They put an air mattress down in their living room and rented it out, with breakfast included. They advertised on a web site. With reference to the air mattress, the two roommates eventually founded airbnb.com.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I think I've mentioned this in the past, but the term "short-term rental" clouds our thinking because the word "rental" contains the unspoken and unproven assumption that they are residential. STRs are not rentals, just as a stay in a hotel is not referred to as renting. In fact, even the Airbnb web site refers to property owners as "hosts" and the customers as "guests", just as hotels do. They can't have it both ways.

A true rental has these characteristics:

* a signed lease
* subject to the state's landlord tenant laws
* often requires tenant to carry renter's insurance
* address listed as tenant's permanent address with the tenant's employer, the IRS, the BMV, the tenant's bank/credit card companies, and the Post Office

The fact that hotel stays and renting are governed by different laws should demonstrate that they are not the same things.

I still don't understand why there aren't zoning issues with STRs in residential communities, unless the area is already zoned mixed residential and commercial.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By CathyA3 on 01/01/2022 9:52 AM
I still don't understand why there aren't zoning issues with STRs in residential communities, unless the area is already zoned mixed residential and commercial.

One small, tourist-y city where I lived recently had a city council that went easy on STRs, since the STRs brought in tourists and arguably helped the economy. The city also imposed a special tax on STRs, boosting the city's income. Plus there's your earlier observation:

Quote:

Posted By CathyA3 on 12/31/2021 1:03 PM
The Michigan House of Representatives recently voted to bar municipalities from completely banning short-term rentals through platforms such as Airbnb or VRBO. Specifically, HB 4722 would amend the Michigan Zoning Enabling Act to prevent Michigan municipalities from completely zoning out short-term rentals.

Isn't the interpretation of zoning, and granting variances for zoning, all about competing economic interests?

AFAIC you are right that "short term rental" is an abuse of language.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By AugustinD on 01/01/2022 10:16 AM
... snip ...
Isn't the interpretation of zoning, and granting variances for zoning, all about competing economic interests?

Exactly. In the past when we've kicked around ideas on how to fix the issues with HOAs/COAs, I've mentioned the big-money interests that have a vested interest in keeping things the way they are.

LetA (Nevada)
Posts: 2,679

Posted:

Democrats continue to destroy Nevada and the Golden Goose of Las Vegas. I no longer work on the strip because I am burned out dealing with crap heads that have a lack of respect and total disregard to others
and come to Las Vegas and treat it as a F - -K palace. The very last thing I want when when I come home from work is to have a house full of douche canoes next door to me or in my neighborhood.
If I wanted debauchery, I would have bought a condo on the Las Vegas Strip.

In the Legislative session of 2021 Democrats came up with this doossey, previously the county completely prohibited STR's

https://noiseaware.com/blog/6-things-to-know-about-the-new-nevada-short-term-rental-bill/

The Bill does not address parking, and having up to 16 people in single family residence, parking will get tight and this will lead to serious problems with people blocking driveways and other parking infractions.
Also missing is having the owner or their agent to live on-site. HOA's should not be burdened with this crap. This will eventually lead to hight assessments because on-site security will need to be hired, and or on-site property manager. Perhaps the HOA could charge the homeowner that commits to renting out their property as a STR a hight assessment to make them think twice.

In a separate bill, the all majority no bi-partiasan support legislature made it illegal for private property owners to tow vehicles with no or expired registration. a problem already having disastrous consequences
because junk cars are starting to litter the neighborhood, and the tow companies don't want to move them. There is a caveat that is more like a cat and mouse game. we can chalk the tires for most violations, but
if they move the vehicle so much as one inch the 48 hour clock starts all over.

STR's serve only one purpose, corporate clients, not vacationeers.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Meanwhile on the west coast:

Western ‘Zoom towns’ take aim at short-term rentals

BenA2 (Texas)
Posts: 1,273

Posted:

Quote:

Posted By LetA on 01/01/2022 3:29 PM
Democrats continue to destroy Nevada and the Golden Goose of Las Vegas. I no longer work on the strip because I am burned out dealing with crap heads that have a lack of respect and total disregard to others
and come to Las Vegas and treat it as a F - -K palace. The very last thing I want when when I come home from work is to have a house full of douche canoes next door to me or in my neighborhood.
If I wanted debauchery, I would have bought a condo on the Las Vegas Strip.

In the Legislative session of 2021 Democrats came up with this doossey, previously the county completely prohibited STR's

https://noiseaware.com/blog/6-things-to-know-about-the-new-nevada-short-term-rental-bill/

The Bill does not address parking, and having up to 16 people in single family residence, parking will get tight and this will lead to serious problems with people blocking driveways and other parking infractions.
Also missing is having the owner or their agent to live on-site. HOA's should not be burdened with this crap. This will eventually lead to hight assessments because on-site security will need to be hired, and or on-site property manager. Perhaps the HOA could charge the homeowner that commits to renting out their property as a STR a hight assessment to make them think twice.

In a separate bill, the all majority no bi-partiasan support legislature made it illegal for private property owners to tow vehicles with no or expired registration. a problem already having disastrous consequences
because junk cars are starting to litter the neighborhood, and the tow companies don't want to move them. There is a caveat that is more like a cat and mouse game. we can chalk the tires for most violations, but
if they move the vehicle so much as one inch the 48 hour clock starts all over.

STR's serve only one purpose, corporate clients, not vacationeers.

So you are saying that the democrats in Nevada are protecting the interests of corporations and free enterprise? That's a little surprising.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By CathyA3 on 01/04/2022 10:38 AM
Meanwhile on the west coast:

Western ‘Zoom towns’ take aim at short-term rentals

That a small group of citizens in Oregon, with $35,000 of donations, started a ballot initiative, and the initiative passed is cool! The new law does away entirely with short-term rentals in unincorporated communities in the county. The opposition was a bunch of property manager, realtor and landlord types. The latter spent over $238,000.

Nice plug for grizzly bears. Evidently seasonal employees are now often turning to camping instead of trying to pay the rent locally. More bear-person encounters are occurring.

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