Wisconsin Supreme Court Rules Short-term Rentals Not Prohibited by Commercial Activity Restriction. Will Your Condominium Association Rules Hold Up?

Have you ever stayed at an AirBnB or VRBO or HomeAway rental, or any of the other numerous alternatives to a hotel? These “short-term rentals” or “STRs” are becoming more and more popular. Almost 14% of total worldwide room sales came from STRs in 2017. However, as these arrangements become more and more popular they are running into more and more resistance from not only regulatory authorities but also from the neighbors of the people renting out their homes, apartments, or condominium units.

This makes sense; most of the time people on vacation have different expectations in terms of noise level, quiet hours, and cleanliness than someone peacefully enjoying their permanent residence and interacting with their neighbors week after week.  If you are a condominium association and want to restrict STRs to protect the expectations of your association members, how can you make sure you’re doing so effectively and legally? Because of the demand and popularity of these rentals, this question arises more and more, and unfortunately many condominium associations have not taken the proper steps to ensure that STRs are adequately restricted in their communities.

A recent decision from the Wisconsin Supreme Court has thrown a wrench into the works and undone the past efforts of many condominium associations to restrict STRs in their units. The Wisconsin Supreme Court in Forshee v. Neuschwander, 2018 WI 62, held that in order to be enforceable, any restrictions must be in “clear, unambiguous, and preemptory terms.” Any question or ambiguity will be read in favor of allowing STRs on the property. In Forshee the Court then held that a restriction prohibiting “commercial activity” did not prohibit short-term rentals. This language is a popular condition in many condominium association documents.

Is your condominium association properly prepared to prohibit or restrict short-term rentals in your units? This may not have even been an issue that associations had to consider 20 or 30 years ago when the condominiums were created. Even if your condominiums are new, if you took steps to restrict STRs before 2018, the steps you took might not be good enough anymore. Neider & Boucher has helped condominium associations ensure that they have control over how their units are used, and we will continue to help as the law regarding these new uses changes and evolves. Helping people navigate the law and making sure that they can control their own future is what we do at Neider & Boucher.

This article does not constitute legal advice. Please consult legal counsel to determine how this information applies to any specific situation.  If you have questions about Forshee v. Neuschwander or your condominium association documents, please contact Eric Klemm at Neider & Boucher S.C. at 608-661-4500.

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By Attorney Eric Klemm