The Wisconsin Court of Appeals has ruled that the Village of Sister Bay cannot enforce a limit on short-term rentals that restricts property owners from renting out more than four bedrooms. This decision affects homeowners in the village who own properties with five or more bedrooms and had been renting them out. The court's ruling is significant because it reinforces the rights of homeowners under state law to rent their properties as they see fit.
The case, Hunter Clinton v. Village of Sister Bay (2025AP001825), arose after the Village amended its zoning code in 2023 to impose a four-bedroom limit on short-term rentals. The plaintiffs, a group of property owners including Hunter and Jessica Clinton, John and Erin Wilson, Nick and Tara Froemming, and Mark and Caley Swanson, argued that this limit conflicted with Wisconsin's “Right to Rent” law, which allows homeowners to rent their entire homes. The circuit court initially sided with the Village, granting summary judgment in its favor, but the property owners appealed the decision.
The dispute began when the Village adopted a Short-Term Rental Licensing Ordinance in 2022. This ordinance aimed to regulate short-term rentals while ensuring they did not disrupt the community's quality of life. However, in June 2023, the Village passed an amendment that limited short-term rentals to a maximum of four bedrooms, leading to the current legal battle. The property owners contended that they were either already renting their homes or were in the process of building homes intended for short-term rental, making the new limit problematic for them.
In its ruling, the court concluded that the Village's four-bedroom limit logically conflicts with the language of WIS. STAT. § 66.1014, which protects homeowners' rights to rent their properties. The court stated, "The Village’s four-bedroom limit on short-term rentals functions as a local prohibition on the otherwise lawful rental of a part of a residential dwelling, which is in logical conflict with the plain language of WIS. STAT. § 66.1014." The judges involved in the ruling included Stark, Hruz, and Gill.
The court's decision overturned the circuit court's summary judgment in favor of the Village and ordered the lower court to issue a revised judgment declaring the four-bedroom limit void. This ruling emphasizes that local governments cannot impose restrictions that contradict state law regarding property rentals.
The impact of this ruling is significant for homeowners in Sister Bay and potentially other municipalities in Wisconsin. It clarifies that homeowners have the right to rent out their entire homes, regardless of the number of bedrooms, as long as they comply with licensing requirements. This ruling may encourage more homeowners to consider short-term rentals as a viable option for generating income.
Looking ahead, the Village of Sister Bay may consider appealing this decision to the Wisconsin Supreme Court. Such an appeal could further clarify the balance of power between state law and local ordinances regarding short-term rentals. Meanwhile, the ruling sets a precedent for similar cases involving short-term rental regulations across the state, potentially leading to changes in how municipalities approach zoning laws related to rental properties.