Tuesday, March 5, 2024

City of Wilmington granted ‘stay’ on short-term rental ruling, appeal may be next

Wilmington’s short-term rental law was struck down by a judge this week. Now what? (Port City Daily photo / File)

WILMINGTON — On Thursday evening the City of Wilmington announced a Superior Court judge had granted a stay on an order striking down the city’s short term rental ordinance, pausing the sweeping repercussions of the ruling.

The ruling from Judge R. Kent Harrell, issued earlier this week, found that the city’s requirement that property owners register their rentals was in violation of state law. While the city had for years disavowed the state law on what appeared to be a technicality, Harrell found the statute ‘clear and unambiguous.’

Related: ‘Void and unenforceable’: Superior Court judge strikes down Wilmington’s STR ordinance

Since the city’s short-term rental law is largely predicated on the registration requirement, Harrell’s order struck down the ordinance completely. This renders the city’s restrictions on short-term rentals “void and unenforceable,” and would allow anyone who wanted to rent a whole-house property to do so, free from city interference.

As expected, the City of Wilmington quickly moved for a stay, which would freeze the ruling until the appeals process is complete. The city made two arguments for a stay:

  • First, the city argued that the plaintiffs, in this case the Schroeder family who challenged the city’s law, are automatically granted a stay until the matter is resolved (meaning they can continue to rent unless a future appeal overturns Harrell and reinstates Wilmington’s law).
  • Second, the city argued that if the court allowed whole-house renting by anyone who desired to do so, it could set up a situation where property owners who invest in property could lose that investment if, down the road, the Court of Appeals or Supreme Court were to overturn Harrell.

While the city’s putative concern for rental property owners, expressed in the second argument, might strike some as ironic it is a plausible scenario — that is, it’s possible some could jump back into the STR business only to be forced out again by a court ruling several months down the line.

Harrell granted the city’s request and issued a stay. For now, STRs will continue to be regulated as they were before the court ruling. According to a release from the city, it “will continue to accept registration applications for homestays and whole-house rentals in the same manner that it has since the ordinance was initially adopted.”

While the City has not officially filed for an appeal yet, that would likely be the next step is the city hopes to maintain regulatory control of short-term rentals. City Council and the city attorney’s office will be reviewing Harrell’s order over the next several weeks, and plan to hold a closed session as soon as October 5 to discuss potential further litigation.

City’s Motion for Stay Pending Appeal – PCD by Ben Schachtman on Scribd

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