New Michigan Laws could Affect your Luxury Short Term Rental

The Michigan Legislature has two bills, Senate Bill 880 and House Bill 4722, aimed at regulating short term rentals in Michigan. House Bill 4722 (“HB 4722”) is also known as the “Realtor Bill,” or the “ban on the ban” bill. The House passed HB 4722 on October 27, 2021, and it proposes to amend the Michigan Zoning Enabling Act to add that short-term rentals are a residential and not a commercial use of property. Under HB 4722, local units of government could not adopt or enforce zoning ordinance provisions that have the effect of prohibiting short-term rentals, aside from regulating noise, advertising, traffic, and other conditions that may create a nuisance. The bill would allow a local unit of government to limit to no fewer than two the number of properties under common ownership that could be used for short-term rentals in the area. It would also allow the local unit of government to limit the total number of short-term rental units in the area to no less than 30% of the total existing residential units. Senate Bill 880 (“SB 880”) creates a short-term rental regulation act, and it is tie-barred with HB 4722.

How will these bills affect your luxury short term rental? As of right now, if you are in the market for acquiring a property with aspirations for it to become a short-term rental, these bills are good news. Especially considering that, as of now, the Courts in Michigan have rendered a patchwork of decisions that significantly restrict a homeowners’ use of their property for short term rental purposes. Just recently, in Eager v Peasley, 322 Mich App 174 (2017) and Cherry Home Association v Baker, Docket No. 354841 (2021), Michigan Courts determined that short-term rentals violated private occupancy/private dwelling requirements (Eager) and violated residential use/one family dwelling restrictions (Cherry Home). The restrictions mentioned in the above cases quite commonly exist as township or city ordinances, as well as restrictive covenants or deed restrictions that run with the property. Many current short term rental hosts have no clue that such restrictions apply to the very homes they own and rent, and that they could be enforced by a neighbor or local municipality! House Bill 4722 and SB 880 would allow property owners more freedom to decide whether to own and operate a short-term rental.  However, even if this legislation passes, your property may still have restrictions that could prevent it from being operated as a short-term rental.

Have questions about your short-term rental? Please reach out to Zach Stewart at Zach@crlaw.biz, located in Cooper & Riesterer’s Traverse City office or any of the attorneys at Cooper & Riesterer, PLC. We have extensive experience in advising clients with their luxury short term rental needs, and we have attorneys located across the State.

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