Town of Conway v. Kudrick:
A Landmark Decision on Short-Term Rentals and Zoning
In the recent case of Town of Conway v. Kudrick, the New Hampshire Supreme Court grappled with a zoning ordinance question that has implications for property owners, municipalities, and the growing short-term rental (“STR”) market. The Court was asked to determine whether non-owner-occupied STRs are permitted in residential districts under a Town of Conway zoning ordinance. In a divided opinion, the Court ultimately ruled in favor of the property owner, finding that non-owner occupied STRs fall within the definition of a “residential/dwelling unit” and are therefore permitted in the Town of Conway’s residential zones.
Background of the Case
The case centered around a property owner, Scott Kudrick (“Kudrick” or “Plaintiff”), who owned three residential properties in Conway’s residential districts. He used these properties as non-owner-occupied STRs, listing them on popular rental platforms such as Airbnb. In 2021, the Town of Conway sought a declaratory judgment action against Kudrick, alleging that his use of the properties for STRs violated a Conway Zoning Ordinance (“CZO”). See CZO § 190-31.
The CZO defines a residential/dwelling unit as “[a] single unit providing complete and independent living facilities for one or more persons living as a household, including provisions for living, sleeping, eating, cooking, and sanitation.” CZO § 190-31 (emphasis added). The central issue in the case was whether the occupants of Kudrick’s properties could be considered as “living as a household,” as required in the CZO’s definition of a residential/dwelling unit.
The Trial Court’s Decision
The trial court sided with Kudrick, ruling that non-owner-occupied STRs are permitted in residential districts under the CZO. It reasoned that—unlike the ordinances found in some other towns—the CZO’s definition of a residential/dwelling unit did not include a durational or relational component, and that the use of a residential property for short-term rentals did not defeat its residential status.
The New Hampshire Supreme Court’s Decision
On appeal, the New Hampshire Supreme Court upheld the trial court’s decision. The majority opinion, written by Justice Donovan, held that the CZO’s definition of a residential/dwelling unit does not require a durational component, and that non-owner-occupied STRs are permitted in residential districts.
The majority reasoned that the relevant language in the CZO (“living as a household”) focuses on the residential character of the activities taking place on the property, rather than the identity of the occupants or the duration of their occupancy. The court further emphasized that the CZO defines a residential/dwelling unit by its provisions for living, sleeping, cooking, and eating, and having its own sanitary facilities – not by the duration of occupancy.
Finally, the Court declined to entertain public policy considerations regarding the impact of STRs on the community, noting that such considerations are better suited for the legislature and municipal authorities, rather than New Hampshire’s courts.
The Dissenting Opinion
Justice Bassett, in a dissenting opinion, argued that the majority’s interpretation of “living as a household” was overly broad and failed to recognize the relational and durational dimensions that the phrase demands. He contended that the term “household” requires more than a transient or temporary occupancy, and that the majority’s interpretation would render the phrase “living as a household” as mere surplusage.
Justice Bassett cited several cases from other jurisdictions, which have held that the term “household” and similar phrases require some degree of permanency and connection, rather than a group of individuals just being alive in the same place at the same time.
Implications of the Decision
Town of Conway v. Kudrick has significant implications for property owners, municipalities, and the STR industry. By ruling that non-owner-occupied STRs are permitted in residential districts under the CZO, the New Hampshire Supreme Court has provided clarity on the issue for property owners in the Town of Conway and in towns with similarly worded ordinances. The decision may also serve as persuasive authority for courts in other jurisdictions facing similar questions.
For property owners, the ruling may be seen as a victory as it upholds their right to use non-owner occupied properties for short-term rentals in certain residential districts. This decision may encourage more investors to enter the New Hampshire STR market, as it provides a degree of legal certainty on the issue.
Municipalities, on the other hand, may need to reconsider their zoning ordinances if they wish to restrict or regulate STRs within their residential districts. The decision makes it clear that any restrictions or regulations on STRs must be explicit and unambiguous in order to withstand judicial scrutiny. Any ambiguity will be construed in favor of the property owner.
And, for the STR industry at large, this decision may signal a positive trend as it reflects a court’s willingness to interpret zoning ordinances in a manner that is favorable to property owners. However, it remains to be seen whether courts in other jurisdictions will adopt similar interpretations of municipal zoning ordinances, or whether they will follow the dissent’s approach, which requires a greater degree of permanency and connection for a residential property to be considered as “living as a household.”
In conclusion, Town of Conway v. Kudrick serves as important precedent for property owners, municipalities, and the STR industry. The New Hampshire Supreme Court’s ruling, in favor of permitting non-owner-occupied STRs in residential districts, will likely have significant implications for the future growth and regulation of the STR market in New Hampshire. Municipalities seeking to limit or regulate STRs should take note of this decision and consider revising their zoning ordinances accordingly to ensure clarity and legal enforceability.
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