BERRIEN COUNTY, Mich. (Michigan News Source) – The Michigan Supreme Court just gave short-term rental owners a reality check – by deciding absolutely nothing. In a 3-3 deadlock that left a lower court ruling intact, the justices upheld a ban on short-term rentals in a nine-home Lake Michigan subdivision. The message? If your dream is to turn your lakeside cottage into a cash cow, your neighbors (and the courts) might have other plans.
According to legalnews.com, the drama unfolded in Swift Estates, a cozy enclave in Berrien County, where two sets of out-of-state homeowners – one living in England, the other in Washington state – thought listing their properties on vacation rental sites would be a smart move, having bought the properties specifically to rent them in the future after being told by their real estate brokers that rentals were allowed.
1977 covenant beats Airbnb dreams in Berrien County.
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Their neighbors, unimpressed by the steady stream of 55 renters between 2012 and 2020 and their party habits, pointed to a 1977 covenant that said the homes were meant for “single-family residence purposes.”
According to the lawsuit, specific concerns included large group parties, increased congestion in the neighborhood, use of the community tennis court and private beach, renters cutting through and trespassing on residents’ properties, and renters urinating and leaving trash on the beach.
The Berrien Circuit Court agreed that the homes were meant for single-family residences and not rentals – and so did the Michigan Court of Appeals. The state Supreme Court? They were split right down the middle. Justice Noah Hood didn’t participate so the tie meant the appellate ruling stood.
Justice Elizabeth Welch, joined by Justices Richard Bernstein and Brian Zahra said the renters were in violation of the covenant. Justice Kimberly Thomas, backed by Chief Justice Cavanagh and Justice Kyra Harris Bolden, dissented, arguing the covenant was too vague, an interpretation that favors the property owners.
This appears to be in opposition to the non-vague language of the covenant in Article IV that says, “No lot shall be used for other than single family residence purposes.” “Single family” is defined as: any dwelling structure on a lot intended for the shelter and housing of a single family.
Covenants override Airbnb plans.
So what’s the takeaway for Michigan’s would-be vacation-rental moguls? Check your neighborhood covenants before you stock up on mini shampoo bottles. If the rules say “single-family only,” don’t assume that means “single-family per night.”
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The Michigan Supreme Court’s non-decision reinforces the enforceability of restrictive covenants in similar cases, depending on local laws. For now, though it’s neighbors 1, Airbnb renters: 0.
