Finally! Some Push Back on Short Term Rentals
After a series of rulings adverse to community associations’ and local governments’ efforts to limit or prevent short term rentals, the Third District Court of Appeal in City of Miami v. Airbnb, etc., et al., No. 3D17-1213 (Fla. 3d DCA, December 5, 2018), upheld the City of Miami’s code ordinance preventing short term rentals.
At issue in City of Miami case was a 2017 resolution ratifying the Miami’s zoning code, which precluded rental accommodations less than one month in its T3 zone. The T3 zone contains most of the Miami’s single-family houses and duplexes. AirBnB filed an action stating Section 509.032, Florida Statutes prevents Miami from passing an ordinance or code prohibiting or unduly regulating short term vacation rentals and sought an injunction to prevent Miami from enforcing the ordinance. The trial court agreed with AirBnB and issued an injunction prohibiting Miami from enforcing the ordinance. Miami appealed the decision.
In reversing the trial court, the Third District Court of Appeal struck down the injunction halting Miami’s vacation rental ban as overbroad and not preempted by Section 509.032 because, although the ordinance was passed in 2017, the material provisions of the code were adopted in 2009, preceding the adoption of Section 509.032.
In another recent case, the Supreme Court of Kentucky created what some hope to be persuasive authority of other jurisdictions to follow regarding community associations’ ability to limit short term rentals.
In Don Hensley v. Keith A. Gadd, et al., Nos. 2017-SC-000189-DG, 2017-SC-000431-DG. (Ky. November 15, 2018), Hensley created multi-lot subdivision. The lots were subject to a set of restrictive covenants which, among other things, limited the use of the lots to residential purposes, and the principal structure is to be a single-family residence. Further, the restrictive covenants provided “no trade, business, or profession of any kind [is] permitted to be carried out[,]” Hensley took action against Gadd who was using his home on Lot 3 to engage in short term rentals.
The Court determined that the short term rentals were, in fact, a prohibited commercial use. The Court stated “[i]n this case, Hensley created a single-family residential subdivision for Lots 2-15. On those lots, the use is limited to residential purposes, and the principal structure is to be a single-family residence. Further, ‘no trade, business, or profession of any kind [is] permitted to be carried out[,]’ although rentals are permitted.” Because Gadd used Lot 3 as the functional equivalent of a hotel, i.e., a structure advertised or held out to the public as a place where sleeping accommodations are furnished to the public on a short-term transient basis, designated it as a hotel on forms provided to the Commonwealth, and correspondingly paid taxes to the Commonwealth on those rentals, his use of the property violated the Deed of Restrictions.”
Notably, the Kentucky ruling is diametrically opposed to Florida’s First District Court of Appeals’ decision in Santa Monica Beach P.O.A. v. Acord, Case No. 1D16-4782, (Fla. 1st DCA, April 28, 2017), where the Court determined regularly renting a home on a short term basis does not transform the use of the property from residential to commercial and does not violate restrictive covenants limiting the use to residential. Interestingly, the Court in Santa Monica cited the Kentucky appellate decision, which was overturned by the Supreme Court of Kentucky in Hensley case. Perhaps the Supreme Court of Florida will weigh in on the issue as well and will likewise determine routine, advertised short term rentals constitute a commercial use. We published on article on this case several months ago titled Court Ruling Delivers Setback to Community Associations Restricting Short Term Vacation Rentals.
As more and more cities, counties, and community associations adopt ordinances and restrictions intended to regulate, limit or prohibit short term rentals, these cases may lay the groundwork for courts upholding in future cases the authority of these entities to adopt such regulations.