Monday, October 3, 2022

City of Wilmington’s short-term rental ordinance appears to contradict state law

State law appears to be clear, stating, ‘In no event may a city do any of the following: adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission from the city to lease or rent residential real property …’

WILMINGTON — The City of Wilmington spent considerable resources trying to figure out how to regulate short term rentals and, after three years, local leaders officially passed an ordinance doing just that.

However, an apparently obscure state statute appears to make the city’s own regulations unlawful.

According to State Statute Chapter 160A-424, cities are not permitted to require property owners or managers of rental properties to obtain permission from the city to rent their land (in most instances).

According to the law, “In no event may a city do any of the following: (i) adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission from the city to lease or rent residential real property,property or to register rental property with the city, except for those properties individual rental units that have either more than four verified violations in a rolling 12-month period or two or more verified violations in a rolling 30-day period, or upon the property being identified within the top 10% of properties with crime or disorder problems as set forth in a local ordinance.”

A direct conflict?

“In no event may a city do any of the following: (i) adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission from the city to lease or rent residential real property, property or to register rental property with the city,” NOrth Carolina General statute §160A-424

But the City of Wilmington’s short term rental ordinances, approved in 2018 and 2019, seem to contradict state law and do exactly what the statute says cities cannot.

The city’s homestay ordinance appears to contradict state law as soon as it begins by requiring the registration of rentals.

“A property owner shall register each establishment annually with the City of Wilmington,” the ordinance states.

The state law also prohibits the levying of special fees or a tax on residential rental properties, with some exceptions.

According to the law, “[In no event may a city] Levy a special fee or tax on residential rental property that is not also levied against other commercial and residential properties, unless expressly authorized by general law or applicable only to an individual rental unit or property described in subdivision (i) of this subsection and the fee does not exceed five hundred dollars ($500.00) in any 12-month period in which the unit or property is found to have verified violations …”

When asked about the apparent conflict in its local ordinance, the City of Wilmington did not immediately respond. After over a week, it provided an answer, albeit a very brief one: the city does not believe the law is applicable.

According to City of Wilmington Spokeswoman Malissa Talbert, “The city’s position is that this law deals with building inspections whereas the city’s new ordinance deals with zoning.”

While it is true that the law is found under the General Statutes regulating building inspections, there is nothing in the language of the law that says ‘This law is only applicable to building inspections.’ Further, this particular portion of the law makes no mention to inspections, instead clearly prohibiting mandatory registration of imposing fees.

The City of Wilmington is not the only municipality in the state that has enacted some sort of short-term rental regulations, so the applicability of state law on them could have consequences for cities and property owners across the state.

It would likely take a property owner appealing the restrictions in court with the argument that state law prohibits these requirements before a true answer could be reached.


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