DEARBORN, Mich. (Michigan News Source) — Dearborn’s crackdown on short-term rentals is now being tested outside City Hall, as property owners take the city’s neighborhood ban to federal court.

Less than two weeks after the city’s ban on short-term rentals in residential neighborhoods took effect, a group of property owners has sued Dearborn, arguing the ordinance approved last summer goes beyond zoning and into unconstitutional territory.

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The lawsuit, filed Jan. 8, challenges the City Council’s July decision to bar short-term rentals from residential zones and single-family homes, limiting them instead to downtown and business districts. 

City leaders said the move was intended to address noise complaints and parking issues—concerns repeatedly raised during public comment ahead of the unanimous vote.

But the Plaintiffs contend the city unlawfully treated all short-term rentals as nuisances without individualized findings, violating due-process protections. The suit also claims the ordinance conflicts with Michigan zoning law and amounts to a regulatory taking by sharply limiting how owners can use their properties.

Councilman Robert Abraham said the city believes it acted within its zoning authority.

“We’re not in a position to reverse the ordinance based on litigation,” Abraham said. “But obviously, if the courts find that we are not correct in following the law, we will adhere to the court’s findings.”