NC Appeals Court rules Wilmington’s restrictions on short-term rentals are illegal
WILMINGTON, NC (WWAY)—The North Carolina Court of Appeals has ruled that Wilmington’s short-term rental ordinance violates state law.
The court held that North Carolina law “unambiguously prohibited Wilmington’s short-term rental registration scheme.”
Tuesday’s decision affirmed a 2020 decision from a New Hanover County trial court, which also held, more broadly, that Wilmington’s ordinance was preempted by state law.
“Today’s ruling is yet another decisive victory for property owners in North Carolina,” said Institute for Justice Attorney Ari Bargil. “The North Carolina General Assembly plainly intended to stop these types of ordinances when it passed legislation safeguarding the right to rent out property on a short-term basis. Wilmington officials knew this, but they passed their ordinance anyway. Today’s victory is a long time coming for those who knew that what Wilmington was doing was wrong and decided to fight.”
The Institute for Justice represents Peg and David Schroeder in their challenge against the city’s ordinance that established a lottery system for vacation rentals in Wilmington.
After years of controversy, the City of Wilmington put a two percent cap on the number of vacation rentals in 2019, and set a minimum 400 foot separation between units. The lottery system was used to determine which homes could be rented out short term.
The Schroeders lost their right to rent their property when the lottery awarded that right to one of their neighbors. Under the ordinance, two property owners within 400 feet of one another could not both rent at the same time.
As a result, the Schroeders were told they had one year to stop offering their property on short-term rental sites like Airbnb. The Schroeders challenged the city’s ordinance, arguing that it was unconstitutional and violated state law. Attorneys for the Schroeders say as a result of Tuesday’s ruling, the City of Wilmington can no longer enforce any of these provisions.
“We are overjoyed,” said Peg Schroeder. “We knew all along that what Wilmington was doing was clearly illegal. It’s a shame that it took over two years of litigation to get to this point, but it’s gratifying to see another court tell Wilmington what we’ve been saying all along: Wilmington needs to follow the law.”
The city can appeal the ruling to the North Carolina Supreme Court.
“The city’s attorneys are currently reviewing the court’s decision and intend to brief City Council and discuss possible next steps soon. At that point, Council can provide staff direction on how to proceed,” Jennifer Dandron, media manager for the City of Wilmington, wrote in an email.
