Imagine this: you bought a house with the intent to use it as a short-term rental, and as we all know, real estate is expensive. However, after you purchase the house, you learn the city does not allow – or at least won’t allow you – to use the property as a short-term rental. This was the unfortunate case for 26 individuals and several entities in Moskovic v. City of New Buffalo (2023).

Moskovic v. City of New Buffalo (2023)

In December 2021, these 26 individuals filed a complaint, asserting (among other claims) that the City violated their substantive due process rights under the U.S. and Michigan constitutions and that the refusal to grant them a short-term rental permit constitutes a taking.

Much to these Plaintiffs’ chagrin, the U.S. Court of Appeals for the Sixth Circuit agreed with the City of New Buffalo. Finding that since they waited until after the moratorium was in place to apply for the Short-term rental permits, the Plaintiffs lacked “a legitimate claim of entitlement” to the permits to create a protected property interest in them. This also meant the denial of a short-term rental permit was not a taking because the Plaintiffs could not establish they had a vested property interest in the permit.

In plain English, this means the Sixth Circuit Court found the Plaintiffs could not be deprived of something they never had to begin with.

Research Municipalities Before Investing

The moral of the story here is just because you want to rent out your property does not mean you always can, and you should always do your due diligence before buying an investment property. If you’re looking to add “landlord” or “real estate investor” to your resume, contact Denise Medina at Fausone & Grysko, PLC. Denise can be reached at (248) 380-0000.