Short-term rental ruling against Blowing Rock emphasizes ‘free use of property’

A short-term rental owner won a unanimous N.C. Court of Appeals ruling Tuesday against the town of Blowing Rock. Judges noted the state’s emphasis on the “free use of property.”

The case hinged on whether Chad Frazier’s three-unit property in Blowing Rock was “grandfathered” when the town adopted new short-term rental restrictions in 2019. Town officials argued that they had first placed new restrictions on short-term rentals in the 1980s, long before Frazier bought his property in 2016.

All parties agree that Frazier’s property does not sit in a short-term rental overlay district the town created in 2000. But Frazier and town officials disagreed about whether that overlay district blocked Frazier from legally operating a short-term rental.

Frazier argued his property was a “grandfathered, nonconforming use,” according to the court opinion. “Petitioner maintained he used and intended to use the Property for short-term rentals before, as of, and after the effective date of the new [2019] short-term rental ordinance, and during his ownership, there were no periods of 180 days or more in which he did not use the Property for short-term rentals.”

A Watauga County Superior Court judge agreed with Frazier in March 2021. The judge overturned the town’s decision against Frazier. “The superior court concluded as a matter of law that the language of the Town’s 1984 Land Use Act prohibiting ‘temporary residences renting by the day or week’ in residentially zoned areas was vague and ambiguous, and therefore the Town had no enforceable restriction against ‘short-term rentals of less than 28 days’ until the enactment of the 2019 Amendment,” according to the Appeals Court decision.

“The free use of property is favored in our State,” wrote Judge Jeff Carpenter, referencing state court decisions going back to 1999. “‘Zoning ordinances are in derogation of the right of private property, and where exemptions appear in favor of the property owner, they must be liberally construed in favor of such owner.’”

“Because ‘[z]oning regulations are in derogation of common law rights … they cannot be construed to include or exclude by implication that which is not clearly … their express terms,’” Carpenter added. “[W]hen there is ambiguity in a zoning regulation, there is a special rule of construction requiring the ambiguous language to be ‘construed in favor of the free use of real property.’”

Town officials argued that restrictions on short-term rentals in Blowing Rock date back to 1984, with amendments offered in 2000 and 2019.

Carpenter and fellow Judges John Tyson and Darren Jackson disagreed.

“It is apparent from the plain language of the 2019 Amendment that a lack of clarity and transparency existed and was known to exist with respect to the Town’s regulation of short-term rentals between the 2000 Amendment and the 2019 Amendment,” Carpenter wrote. “Ambiguity logically follows where two comparable, yet apparently distinct land use definitions simultaneously exist in the Town’s Ordinances, but only one is clearly prohibited by the Town’s Table of Permissible Uses. We will not construe ‘short-term rentals’ as defined by the 2000 Amendment, to be impliedly prohibited by cross-reference to a less definite, albeit related, land use category.”

The trial judge in the case labeled Blowing Rock’s regulation of short-term rentals “vague and ambiguous.”

“The superior court properly recognized that this ambiguity left the Town’s purported regulation of short-term rentals between 2000 and 2019 in a state of uncertainty, which in turn, ‘left the rights of landowners to the unguided discretion’” of the town’s Board of Adjustment.

With a “grandfathered” nonconforming use under Blowing Rock’s land use ordinance, Frazier can continue to move forward with short-term rentals.

Blowing Rock could appeal the decision. Since the Appeals Court panel ruled unanimously, the N.C. Supreme Court faces no obligation to take the case.