On Wednesday, July 9, 2025 the Michigan Supreme Court affirmed the Michigan Court of Appeals' ruling from July of 2023 "by equal division of the Court", meaning that a majority of the Justices did not reach a common basis for resolution. This leaves the Court of Appeals decision intact and binding, which had held that private lake community restrictions prohibiting property owners from using their properties as short- term rentals were enforceable (Melvin R. Berlin Revocable Trust et al. v. Thomas C. Rubin et al.).
In this case, Swift Estates is a small community with private beaches on Lake Michigan. The parties in this matter were all lot owners within Swift Estates. Swift Estates' Declaration of Covenants and Restrictions included a restrictive covenant limiting the use of the lots to "single family residence purposes." The issue addressed was whether this restrictive covenant prohibited short-term rentals and if so, are lot owners in violation of this covenant if they rent their property.
Plaintiffs as lot owners in Swift Estates filed suit against defendants, two additional property owners within Swift Estates, to prevent them from using their lots as short-term rentals. The Court of Appeals had determined that the defendants' two lots were "mass-marketed and held out almost exclusively as short-term rentals" and that the defendants primarily used their homes to host transitory renters with no lasting or long-term ties to the homes and therefore did not constitute any degree of permanence as used to define residential use.
The Court of Appeals ruled in favor of the plaintiffs and determined that defendants' use of their properties as almost exclusively short-term rentals violated the restrictive covenant of Swift Estates. The Michigan Supreme Court's divided resolution renders the Court of Appeal's decision as binding law.
What does this mean for you?
It is increasingly important to pay attention and adhere to any restrictive covenants and rules that may apply to your property. When acquiring or disposing of property, pay specific attention to any restrictions or limitations that may impact the use of the property.
Originally published 15 July 2025
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