News: Quick Takes

Judge strikes down Wilmington vacation rental ordinance

A Superior Court judge has struck down Wilmington’s citywide restrictions on vacation rentals. An Institute for Justice news release praised the ruling.

Judge Richard Harrell determined that a Wilmington ordinance violated a state law “prohibiting municipalities from requiring rental permits,” according to IJ, which represented plaintiffs in the case.

“The decision is a win for Peg and David Schroeder, who filed the lawsuit challenging Wilmington’s ordinance imposing a 2% overall cap on vacation-rental properties and requiring a 400-foot separation between vacation rentals,” according to the release. “To decide who could rent their properties under these restrictions, the city forced property owners to enter into a lottery that raffled off the owners’ lifetime right to rent.”

“The winners were able to rent their properties, while the losers — including the Schroeders — were stripped of their right to do so — even if they had been renting their properties without incident for years.”

“Today’s decision marks an important victory for property owners and property rights in North Carolina,” said IJ attorney Ari Bargil. “The decision makes it crystal clear that North Carolina cities cannot impose unnecessary permitting or registration requirements on vacation rentals.”

The Schroeders had spent their entire adult lives in Wilmington before retiring to the mountains. Their retirement plans included renting out a vacation property in their home city. Wilmington’s vacation rental restrictions would have destroyed their plans.

“What a relief,” said David Schroeder in the IJ release. “We bought our home with the intent of occasionally renting it. When we lost the lottery, our only remaining options were to sell our home or file a lawsuit. We sued because we knew that Wilmington’s law was clearly illegal.”

State law provides that cities can require permits or registrations “from owners whose propertied proved problematic in some way,” according to IJ. The law required that every other property owner be left alone.

“According to the trial court’s ruling, the city exceeded the scope of its authority by requiring registration with the city before anyone could offer their property as a vacation rental,” said Adam Griffin, IJ constitutional law fellow. “This ruling affirms that there is a check on local governments that stops them from imposing onerous regulations on law-abiding property owners like the Schroeders.”

Griffin had discussed the case in a recent edition of the John Locke Foundation’s “HeadLocke” podcast.