Decided - The FindLaw Noteworthy Decisions and Settlements Blog

Wisconsin Lakefront Property OK for Short-Term Rental, Court Rules

In the age of the part-time gig and the side hustle, many people try to make extra income by renting out their homes through companies like Airbnb. But not everyone loves these endeavors. The hospitality industry often sees it as a threat and fights it in many cities. And community members aren't always happy to have new neighbors coming and going every few weeks.

In one Wisconsin neighborhood, property owners have been at war over the legality of one couple's use of their home as a rental property. After years of litigation, the state Supreme Court has ruled that their lakefront property may be used as a short-term rental.

A New Party Every Week

Lee and Mary Jo Neuschwander have been renting out their lakefront home in Hayward, WI as a short-term vacation home since 2014. However, neighbors are upset because the rental brings "a new party every week, with a huge group of people who are ready to cut loose and have a good time in a neighborhood they don't know and they have no connection to."

Specifically, they argue that everyone in the neighborhood is obliged to obey a restrictive deed covenant that states, "there shall be no commercial activity on any of said lots." Restrictive deed covenants are promises recorded on a deed concerning the use of the land. The purchaser agrees to abide by certain restrictions as a condition of buying the land. An attorney for the couple argued that public policy favors free and unrestricted use of one's own property.

Court Sides With Rental

While the trial sided with the neighbors, an appeals court ruled in favor of the couple. Finally, the Wisconsin Supreme Court agreed that the couple could rent out their home. In a 6-1 decision, they reasoned that the restrictive covenant was ambiguous with regard to what constitutes "commercial activity." Since the term was not defined in the covenant, it's not clear that short-term rentals were intended to be banned, the court explained.

The lone dissenting justice argued that the couple's "lucrative enterprise" which brought in over $55,000 in rent one year, was clearly "commercial activity" and therefore banned by the restrictive covenant.

If you're unsure about the legality of renting out your property, or you're already at war with your neighbors or the city, get in touch with a local attorney who can help protect your interests.

Related Resources: