In Michigan, the summers are particularly renowned in towns and cities lined along its bordering Great Lakes, as well as the many areas surrounding its numerous inland lakes. Places like northern Michigan bring plenty of tourists and vacationers each year, and busy summer seasons transform quiet lakeside towns into bustling vacation hotspots. It comes as no surprise that since the emergence of online platforms such as Airbnb and VRBO, property owners in these popular destinations have taken advantage of their locations by listing their properties for short-term and vacation rentals.
However, listing one’s property is not as easy or simple as just signing it up on Airbnb. Across Michigan, cities and towns are increasingly restricting or outright banning short-term rentals within their jurisdiction. This blog will therefore provide an overview on what regulations and restrictions are being generally imposed by local governments and how it implicates Michigan property owners.
Generally, a short-term rental is defined as the rental or subletting or a dwelling or residential unit on a premises for a period less than thirty days. As of now, the Michigan Legislature and Michigan Supreme Court have yet to issue any uniform definition or rules with respect to short-term rentals. In 2021, the legislature attempted to amend the Michigan Zoning Enabling Act to include provisions on short-term rentals under what is commonly known as House Bill 4722. However, that Bill fell through due to various reasons (namely tensions between state level regulations and municipal self-governance). Consequently, local governments are currently responsible for drafting and enacting their own regulations for short-term rentals.
Cities and towns have increasingly imposed restrictions for reasons that include combating housing shortages, maintaining housing affordability, preserving traditional qualities in neighborhoods, and curbing the frequency of rowdy and loud renters on vacation. Especially since renting went online with platforms like VRBO or Airbnb, short-term renting has become significantly popular, more accessible, and easier to do. As a consequence, towns and cities are catching up to issue regulations. Approximately a month ago, Spring Lake Township in western Michigan voted to increase local restrictions on short-term rentals by eliminating them altogether for properties zoned as Medium Density Residential – Cottage (R-3).[1] In Traverse City, a well-known vacation spot during the summer season, placed a limit on the number of short-term rentals within specific zones. Recently, Traverse City discussed imposing further limits on short-term rentals, including a potential cap on the entire city as opposed to particular zoning districts.[2]
Michigan courts have addressed certain issues regarding short-term rentals, specifically with how they’re applied to residential use restrictions commonly seen in condominiums and subdivisions. Michigan’s Court of Appeals has found that “the act of renting property to another for short-term use is a commercial use, even if the activity is residential in nature.” Eager v. Peasley, 322 Mich.App. 174, 190 (2017); Aldrich v. Sugar Springs Prop. Owners Ass’n, Inc., 345 Mich.App. 181 (2023). In Aldrich, property owners in a development complex filed suit against their complex’s property owner’s association over restrictions against renting their properties for periods less than six months. This particular development complex was governed by association bylaws and had certain restrictive covenants in place. Therefore, at issue before the court was the interpretation of these bylaws and covenants restricting use to residential purposes only. Therefore, the court had to determine what constitutes a “residential purpose.” Id. Ultimately, the court found the act of renting property for a short-term qualified as a commercial use and therefore, the short-term rentals of property as vacation homes violated the complex’s restrictive covenant for residential purposes only.
With more and more towns setting restrictions or outright bans on short-term rentals, this has a growing impact to owners’ utilizing their property how they wish. Renting homes out as vacation homes is a common and savvy way for people to earn money. And property owners are not the only ones negatively affected; travelers and vacationers are also impacted by these restrictions. Particularly since the online emergence, short-term rentals have afforded greater access for places to stay and more options as to what kind of place one prefers or can afford to stay at. As short-term rentals continue to be an issue across Michigan, the Michigan Supreme Court is set to rule on whether a restrictive covenant limiting property lot use to “single family residence purposes” undeniably prohibits all short-term residential rentals. Melvin R. Berlin Revocable Trust v. Rubin, 513 Mich. 1104 (2024). Therefore, rights to using one’s property may continue to be affected.
As such, property owners seeking to rent their house or condo unit should be familiar with their local ordinance or code to confirm the applicable rules, restrictions or bans on short-term rentals. As discussed above, these regulations often are zoning-specific therefore, property owners should simultaneously confirm what applies to the zoning district their property is located in. Further, local regulations may require property owners submit a permit application specific to short-term rental properties. In completing such applications, owners could be required to undergo fire department inspections, register for certain insurance, and other mandatory steps. Finally, it is important to remind that property owners are entitled to explicit rights that comes along with ownership. Accordingly, challenging municipal bans or fines that violate said rights may also be warranted.
Short-term rental regulation in Michigan is a pertinent and evolving issue. Seeking legal guidance on compliance, advocacy, and/or legal disputes can be beneficial and significant in the outcome of this kind of matter. If you have any questions about this issue or related topics, the land use and zoning attorneys at Dalton & Tomich, PLC, are here to help.
[1] Kayla Tucker, Short-term rental restrictions tighten in Spring Lake Township, MLive, (May 14, 2025) https://www.mlive.com/news/muskegon/2025/05/short-term-rental-restrictions-tighten-in-spring-lake-township.html.
[2] Kody Blair, Traverse City considers limiting new short-term rentals to boost housing options, UpNorthLive (May 7, 2025), https://upnorthlive.com/news/local/traverse-city-considers-limiting-new-short-term-rentals-to-boost-housing-options.
