For nearly four decades, the Goldwater Institute has defended the vital constitutional right to use your home as you see fit so long as the use does not harm your neighbors. In recent years, responsible homeowners who offer their homes as short-term rentals have fallen victim to excessive regulations that don’t target bad actors or keep neighborhoods safe, but instead impose arbitrary rules, destroy livelihoods, and hinder local economic growth. That’s why the Goldwater Institute has defended this important aspect of property rights in courts across the country, and why we drafted the nation’s first comprehensive home-sharing law, enacted by the Arizona legislature to protect people’s rights to share their homes, while allowing government to enforce reasonable rules against nuisances.
Now, Goldwater is standing up for homeowners in Lakeside, Michigan, who have been told they can’t rent their homes to overnight guests, because the community rules say homes can only be used for “residence purposes.” Too often, lawmakers justify anti-home-sharing laws by claiming that commercial activity is never appropriate in residential neighborhoods. We filed a brief in support of these homeowners, because home-sharing is a residential purpose. Rented homes are a common feature of residential neighborhoods. Occupants may live in them for only months or weeks instead of decades, but that hardly makes them anything other than residences. Homeowners often let people stay in their homes in exchange for non-monetary compensation—washing dishes, preparing meals, or providing nanny services—and that does not mean the owner is using the home in a non-residential way.
In Michigan, where tourism comprises a significant portion of the state’s economy, short-term rentals help support travelers’ growing demand, which has exceeded pre-pandemic levels. These tourism dollars support local bars and restaurants, stores, and recreation sites, all of which have seen significant growth in revenue in recent years. In 2022, one in eighteen jobs in Michigan was supported by tourism. But smaller beachfront communities like Lakeside, whose residents and local businesses rely on tourism, lack the hotel supply of the state’s bigger cities and struggle to accommodate visitors. Short-term rentals have helped fill that gap—and in the case of some popular coastal destinations, have done so for over a century.
Nevertheless, a Michigan court said short-term rentals couldn’t have been anticipated by the people who created the Swift Estates neighborhood—after all, internet sites like Airbnb didn’t exist in the 1970s, when the rules were written. Therefore, such practices would not have been considered “residential.”
But the practice of renting single-family homes for short durations was both common and well-advertised to out-of-towners at that time. Short-term rental listings for homes in Lakeside, Michigan, were pervasive in out-of-state newspapers as early as the 1960s. Short-term rentals have long been prevalent in Michigan’s lakeside communities. The people who created the Swift Estates community would have been familiar with them and could have prohibited them had they wished. But they chose not to. That’s why Goldwater and a broad coalition of organizations are filing briefs asking the Michigan Supreme Court to join with other state courts in recognizing that home-sharing is a “residential purpose.”
When determining whether a shared housing arrangement is consistent with local residential or family zoning, state courts across the country have considered how a home is being used rather than duration or the exchange of money between the parties involved. For example, the Wisconsin Supreme Court said that a group of women missionaries living together was a “family” for zoning purposes, where the regulations defined family as “one or more individuals living, sleeping, cooking, or eating on premises as a single housekeeping unit.” And the Vermont Supreme Court found that where laws were silent with regard to the length of rentals, short-term rentals couldn’t be restricted as long as there was “occupancy by a family living as a household unit.” Likewise, a Kentucky court held that a group residence of nurses functioned as a single housekeeping unit, even though they had separate rooms, because they shared a kitchen and other common facilities. For purposes of “residential” versus “commercial” classification, what mattered was not the financial relationships, or sleeping arrangements, or length of occupancy, but whether the occupants used the land like a single-family unit—like a place of abode.
Home-sharing is nothing new, and there is nothing qualitatively non-residential about it. To ban it on that account is nonsensically overbroad. After all, it wouldn’t make sense to ban people from selling homemade items on eBay on the theory that this is somehow “commercial” behavior rather than “residential” behavior. Instead, rulemakers should focus on enforcing reasonable regulations that protect quiet, clean, and safe neighborhoods, rather than limiting choices, hindering the tourism industry, and depriving people of the incentives to use their property as they see fit.
You can read our brief here.
Christina Sandefur is the Executive Vice President at the Goldwater Institute.
Mike Brownfield is the Vice President for Communications and Strategy at the Goldwater Institute.
