Michigan short-term rental rules for owners

Michigan is the state where a missing rule can hurt you. Owners used to other states often assume that if a township says nothing about short-term rentals, they are allowed. In Michigan, the courts have taken a different view, and that single point changes how every lake cottage, up-north cabin and city house should be assessed.

Reaume v. Township of Spring Lake

In May 2019, the Michigan Court of Appeals decided a published case brought by an owner who rented her lakeside home in Spring Lake Township to vacationers. The court sided with the township. Its reasoning is what matters for owners elsewhere:

• The zoning ordinance's definitions of a single-family dwelling and of a family were read as excluding transient or temporary occupation.
• Short-term rental looked more like a motel use, which the ordinance placed in other districts.
• The township's past failure to enforce did not make the use lawful, and because the use had never been lawful, the owner had no prior nonconforming use to protect.

The township had also adopted an ordinance that tolerated only a "limited" form of short-term rental in its single-family zone, capped at a small number of days per year, which the court treated as confirming that ordinary rental activity was not a residential use there.

The practical lesson: in Michigan, a residential district whose ordinance does not expressly allow short-term rentals may well be read as not allowing them. Silence is a risk, not a permission. Read the definitions in the zoning ordinance, not just the list of banned uses.

No state law either way

Michigan has no statewide short-term rental license, registration or cap, and no statute that protects rentals from local restrictions. A House bill that would have barred local bans passed the House in 2021 but died without a Senate vote. Later proposals have focused on taxes rather than zoning. Regulation therefore sits with cities, villages, townships and counties, and along the Lake Michigan shore and in northern resort areas local governments can and do use licenses, caps, zoning limits or pauses on new permits.

Taxes: the 6% use tax and local assessments

• Stays of 30 days or less are subject to Michigan's 6% use tax on accommodations, registered through Michigan Treasury Online.
• Counties and some cities levy a local accommodations tax under a 1974 state law, at rates that vary widely; tourism improvement districts can add an assessment.
• Platforms collect the state use tax on their bookings in most cases, but local taxes and direct bookings often remain with you.

Property tax deserves a look too: a home that loses its principal residence exemption because you no longer live there will be taxed at a higher rate.

Local patterns worth knowing

• Cities such as Grand Rapids tie overnight rentals to a home-occupation license and a special land use approval, with a fire inspection.
• Lakeshore townships may distinguish owner-occupied rentals, allowed more freely, from investment rentals, limited by zone, number or permit.
• Grandfathering is narrow: after Reaume, a use that was never lawful cannot become protected just because it has been running for years.

Where demand comes from

Michigan's rental economy is split between cities and water. Grand Rapids, Detroit and Ann Arbor draw events, universities, hospitals and business travel. The Lake Michigan shore from South Haven and Saugatuck up to Traverse City, the inland lakes and the Upper Peninsula live on summer, fall color and, in places, winter sports. Seasonal properties earn most of their year in a few months, which is exactly where local rules tend to be strictest.

HOAs, condos and insurance

Private covenants are enforceable in Michigan, and many lake associations restrict rentals or set minimum stays. Insurance needs to reflect water: docks, boats, kayaks and swimming, plus winter risks such as frozen pipes in seasonal cottages.

Checklist before buying in Michigan

• Does the zoning ordinance expressly allow short-term rentals in this district, or define them in?
• Is there a local license, a cap or a waiting list?
• Was the current rental ever lawful, or only tolerated?
• Use tax and local accommodations tax registered?
• Covenants and lake association rules read?

Our advice

In Michigan, never buy on the strength of a seller's rental history alone. Get the zoning answer in writing from the city or township, and treat silence as a no until someone with authority says yes. If you own a property here or are considering one, we study every request and tell you honestly whether and how we can help.