The internet is changing all aspects of life, including travel. While the vast majority of travelers traditionally stayed in hotels or motels when visiting from out of town, many travelers now look to short-term rentals—like those advertised on websites like Airbnb, VRBO, and Homeaway—for lodging. However, thanks to a recent Supreme Court decision, travelers to at least one district in Portsmouth, New Hampshire are stuck with the traditional, hotel-based lodging and have no option to seek out short-term rentals.
On September 27, 2019, the Supreme Court released its decision in Working Stiff Partners, LLC v. City of Portsmouth affirming the Rockingham County Superior Court’s holding that short-term rentals are not permitted in the zoning district of the property central to the matter. In this case, property owner Working Stiff Partners, LLC (also referred to as “property owner”) owned a four-bedroom house on Lincoln Avenue in Portsmouth, which was not occupied by any individual(s) as a primary residence. In order to generate revenue, the property owner commenced renovations on the property with the intent of renting in a short-term capacity on Airbnb. Despite outreach from the City of Portsmouth and code enforcement officer, the property owner did not seek permission or confirmation of appropriate use from the City prior to marketing the property for rent on Airbnb. Ultimately, the City issued a cease and desist order to the property owner, citing a violation of zoning provisions as the basis.
Following appeals to the Zoning Board of Adjustment, which upheld the cease and desist order on two separate occasions, the property owner appealed the cease and desist order to the Rockingham County Superior Court. In that appeal, the property owner challenged the City’s position that the Ordinance provisions in the district in which the property was located prohibited short-term rentals, and sought to “enjoin further attempts by the City to regulate short-term rentals pursuant to the ordinance.” Following a presentation of the evidence, the Superior Court upheld the City’s position, affirming the ZBA’s original decision that short-term rentals were prohibited in the district, and denied injunctive relief.
On appeal, the Supreme Court primarily focused on the central argument of whether the Superior Court erred in interpreting the ordinance as prohibiting short-term rental of the property in the district in which it is located. Upon consideration, the Supreme Court held that the Ordinance clearly provided that no lodging facilities were permitted by right in the zone in which the property is located. Further, the Court held that short-term rentals like those advertised on Airbnb constituted “transient occupancy,” meaning the property was not being used as a “dwelling unit” for purposes of the ordinance. Based on these and other criteria, the Supreme Court upheld the decisions of the ZBA and Superior Court in finding the short-term rental use of the property as prohibited within the district in which it is located, and consequently is not a permitted use.
This case illustrates how technology and law often challenge one another, and how increased innovation and new ideas must continue to fit within the traditional mold of existing laws. While Airbnb and other short-term rental websites are an appealing way for property owners to make extra income, property owners should be aware that they are not necessarily permitted to undertake such a venture by right. Federal, state, and local regulations must all be satisfied for a property use to be permitted; and research confirming such use is critical to avoid time and cost associated with improper property use.