As our inland lakes in Michigan begin to (finally) ice over for the winter, lakefront property owners often {nd themselves planning for the upcoming season and use.
The advent of short-term transient rentals (Airbnb, HomeAway, and similar services) has become an attractive way to offset the costs of property that one does not “ use” every day. There are, however, numerous legal issues to navigate before considering whether to utilize your lakefront property for such purposes.
Many municipalities in Michigan have determined that regulation of short-term transient rentals via adoption of local ordinances is the most prudent way to ensure the safety of all parties, allowing for {re department inspections and other safety checks. Other municipalities have prohibited the rentals outright, likely in part due to the impacts heavy rental use may have on a community not otherwise designed or zoned.
A separate and distinct issue is whether, assuming the municipality permits short-term transient rentals, each neighborhood allows for the activity. Many lakefront subdivisions, particularly those with shared beaches, parks and other features, were created with deed restrictions imposed by the creator of the subdivision (commonly called conditions, covenants, and restrictions) to regulate its use and development. Restrictive covenants in deeds are grounded in contract. The right to make and enforce contracts is among those rights which are the essence of civil freedom.
Deed restrictions frequently contain clauses limiting use of the subdivision to residential purposes only, and frequently contain clauses prohibiting commercial uses in the subdivision. In considering short-term rentals, Michigan courts have recently determined prohibition of “commercial use” in deed restrictions include short-term rentals. Deed restrictions limiting uses in a subdivision for “residential purposes only” or “residential use” may prohibit short-term transient rentals, and deed restrictions that are silent on “residential use” but prohibit commercial purposes are often construed as prohibiting short-term transient rentals.
Construing the grantor’s intent in deed restrictions, often drafted over a century municipality may have entirely different positions on the matter. If you have questions about this emerging field, please feel free to contact us at info@linnellfirm.com.
