Issues associated with short-term rentals are a major problem facing many Michigan homeowners associations. It is not uncommon for issues to arise between homeowners that use their property for short-term rental purposes and permanent residents.
Permanent residents in historically residential communities that live next to short-term rentals often experience nuisance issues related to noise, parking, traffic, or trash that interfere with the quiet enjoyment of their property.
As previously discussed in Michigan Court of Appeals affirms Short-Term Rental Ban in Restrictive Covenant, many restrictive covenants have express prohibitions that prohibit short-term rentals. Examples of restrictive covenants that may be used to prevent extensive and disruptive short-term rentals are as follows:
- A covenant that limits the use of property to residential use.
- A covenant that prohibits commercial use.
- A covenant that bans rentals altogether, imposes a rental cap or requires a minimum rental period.
- A covenant that prohibits an owner from engaging in an activity that constitutes a nuisance.
While obtaining injunctive relief to enforce restrictive covenants is the easiest way to stop disruptive short-term rentals, the lack of a restrictive covenant may not necessarily preclude a property owner from pursuing a claim to establish a nuisance per se to prevent disruptive short-term rental activity. Laws regarding short-term rentals, specifically in local zoning ordinances, can be an effective tool to stop disruptive short-term rental activity as demonstrated by a recent ruling from the Michigan Court of Appeals. In Pigeon v Ashkay Island, LLC, unpublished opinion of the Court of Appeals, issued January, 28, 2021 (Docket No. 351235), the Michigan Court of Appeals held that a group of property owners could prevent their neighbor from engaging in short-term rental activity as it constituted as nuisance per se when the zoning ordinance did not permit short-term rentals.
Understanding the Facts of the Case: Pigeon v Ashkay Island
Defendant, Ashkay Island, LLC, was the owner of a 70-acre parcel in Manchester Township, Michigan. Most of the parcel was covered by Iron Mill Pond, which contains an island that had a seasonal cabin located on it. The Plaintiffs were numerous neighbors that own real property that abutted the Iron Mill Pond. Plaintiffs claimed that Ashkay Island, LLC was operating a resort, as the cabin was used by numerous families, advertised for short-term rentals, and the owners of Ashkay Island, LLC never occupied the cabin. In contrast, Ashkay Island, LLC argued that the cabin was always used by “one family” and that the family that owned Ashkay Island, LLC occasionally used the cabin. Ashkay Island, LLC submitted an affidavit indicating that there had only been four instances in which the renters of the house were not family members of the owners of Ashkay Island, LLC between May 2016 and October 2018. The trial court granted summary disposition in favor of Ashkay Island, LLC, and the plaintiffs appealed.
Analyzing the Outcome of the Case: Pigeon v Ashkay Island
The Court of Appeals reversed the trial court and held that Ashkay Island, LLC had created a nuisance per se by violating the zoning ordinance. MCL 125.3407 defines a nuisance per se as follows:
Except as otherwise provided by law, a use of land or a dwelling, building, or structure, including a tent or recreational vehicle, used, erected, altered, razed, or converted in violation of a zoning ordinance or regulation adopted under this act is a nuisance per se. The court shall order the nuisance abated, and the owner or agent in charge of the dwelling, building, structure, tent, recreational vehicle, or land is liable for maintaining a nuisance per se.
In determining that the neighbors had standing to pursue an action to abate the nuisance per se created by the short-term rentals, the Court stated that “A private citizen may bring an action to abate a nuisance ‘arising from the violation of zoning ordinances or otherwise when the individuals can show damages of a special character distinct and different from the injury suffered by the public generally.’ Towne v. Harr, 185 Mich. App. 230, 232; 460 N.W.2d 596 (1990).”
The parties framed the dispute in terms of whether the cabin was a “single-family dwelling” and whether the cabin has been used as a “single-family dwelling” under the zoning ordinance. The zoning ordinance permitted the following single-family use:
Dwelling: Any building, or part thereof, containing sleeping, kitchen, and bathroom facilities designed for and occupied by one family….
Dwelling, One-Family or Single-Family: An independent, detached residential dwelling designed for and used or held ready for use by one (1) family only. Single-family dwellings are commonly the only principal use on a parcel or lot.
Family: One (1) or more persons related by blood, bonds of marriage, or legal adoption, plus up to a total of three (3) additional persons not so related who are either domestic servants or gratuitous guests, occupying a single dwelling unit and living as a single nonprofit housekeeping unit.
Based on the above language in the zoning ordinance, the parties made the following arguments:
A collective number of individuals living together in one dwelling unit, whose relationship is of a continuing non-transient domestic character, and who are cooking as a single nonprofit housekeeping unit. This definition shall not include any society, club, fraternity, sorority, association, lodge, coterie, or group of transitory or seasonal nature or for a limited duration of a school term or terms of other similar determinable period. According to plaintiffs, the key word in the MTZO’s definition of a “dwelling, one-family or single family,” is “residential.” They cite caselaw indicating that a “residence,” at least for purposes of restrictive covenants, is a place where someone lives or has a permanent presence. See e.g., Eager v. Peasley, 322 Mich. App. 174, 189; 911 N.W.2d 470 (2017). Plaintiffs argue that because renters are not residents of the house on Ashkay Island, defendant’s property is not being used as a single-family dwelling. Defendant counters that the MTZO does not contain any requirement regarding how long a family must live in a dwelling, and argues that renting the house to one family (as that word is defined by the MTZO) at a time satisfies the requirement that the dwelling be “used or held for use by one [1] family only.”
In interpreting a similar zoning ordinance in Indian Vill Ass’n v Shreve, 52 Mich App 35, 36; 216 NW2d 447, 448 (1974), the Court of Appeals held that a homeowners association had standing to enforce a zoning ordinance against a property owner that rented rooms in their house on a short-term basis. Specifically, the Court determined that this was not a single-family residential use under the zoning ordinance. Notwithstanding the precedent set in Indian Vill Ass’n, supra, the Court declined to decide whether occasional rentals to “single families” constituted single-family use under the zoning ordinance in this case as the court ultimately decided this case on a different section of the zoning ordinance.
Specifically, the Court of Appeals held that the house was a “tourist home”, which was not permitted under the zoning ordinance. The Court of Appeals held as follows:
A tourist home is defined as follows: “A dwelling in which overnight accommodations are provided or offered to transient guests for compensation. A tourist home shall not be considered or construed to be a multiple dwelling, motel, hotel, boarding or rooming house.” Tourist homes are permitted only in the Community Commercial Center Zoning District (CC District).
The house on Ashkay Island is a dwelling that is being rented overnight to transient guests for compensation. Defendant asserts that the house is not a tourist home because the guests are not provided overnight accommodations…. In any event, defendant is undoubtedly providing overnight accommodations as the renters are given exclusive occupation of the house along with numerous other amenities such as the use of the boats on the property. Accordingly, defendant is using the house as a tourist home.
Section 4.03A of the MTZO provides that “[u]ses shall be permitted [in a District] only if they are specifically listed herein.” Because tourist homes are permitted only in the CC District, they are necessarily prohibited in the other districts, including the AR District where Ashkay Island is located…. Therefore, defendant is violating the MTZO by operating a tourist home in the AR District. Plaintiffs are entitled to summary disposition of their nuisance-per-se claim.
Accordingly, the Court of Appeals reversed the trial court and concluded that the defendant’s home was a “tourist home” that was being operated in violation of the zoning ordinance.
Will Michigan Prohibit Short-Term Rentals in the Future?
Case law regarding short-term rentals in Michigan favors homeowners associations and property owners that desire to prohibit short-term rentals. As previously indicated in Michigan Court of Appeals affirms Short-Term Rental Ban in Restrictive Covenant, residential use and commercial use restrictions in restrictive covenants can be used to prohibit short-term rentals. However, if the restrictive covenants were poorly drafted, or property is not subject to restrictive covenants, the local zoning ordinance may provide a means to prohibit short-term rentals. Accordingly, the decision in Pigeon v Ashkay Island, LLC is significant as it demonstrates that a court will issue injunctive relief to prohibit disruptive short-term rentals solely based on a violation of local zoning ordinance as such a violation constitutes a nuisance per se.
Kevin Hirzel is the Managing Member of Hirzel Law, PLC. He concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He is also a member of the Community Associations Institute’s (“CAI”) National Board of Trustees. Mr. Hirzel has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2020, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel has been named a Leading Lawyer in Condominium & HOA law by Leading Lawyers Magazine from 2018-2020, an award given to less than 5% of the attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 986-2290 or kevin@hirzellaw.com.
