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Proposed bill could hurt Wilmington’s short-term rental lawsuit case

Updated: May. 31, 2021 at 12:28 PM EDT
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WILMINGTON, N.C. (WECT) - A bill that has passed the House and is now in the State Senate could have big implications for Wilmington’s short-term rental lawsuit. HB 829 looks to once again amend state law – this time – to remove any ambiguity about municipalities’ abilities to require registration of short-term rentals.

The City of Wilmington’s case is currently in the state appeals court after a superior court judge ruled that the city’s rental requirements were invalid. That did not stop the city from appealing the decision but now House Bill 829, which was filed by Rep. Dean Arp, could impact the city’s suit. The bill would “clarify the prohibition on a local government’s ability to require permits or a registration system for residential real property rentals.”

The bill would remove nine words from the current state statute regarding the registration of rentals.

“House Bill 829 would clarify that a local government is prohibited from adopting or enforcing an ordinance requiring a permit or registration system to lease or rent residential real property and would provide that this prohibition is not limited to ordinances adopted under Article 11 (building code enforcement) or Article 12 (minimum housing code enforcement) of Chapter 160D of the General Statutes,” according to a bill summary.

David and Peg Schroeder first appealed Wilmington’s decision to prevent them from renting their home back in 2019. Nearly two years later, their fight continues, in part, due to help they got from the Institute for Justice, a national law firm.

And while the lawsuit continues, the bill has passed the State House, it is now up to the State Senate to decide if the bill will move forward and become law.

Arp faced questions from local Representative Deb Butler on the intent of the new bill, and according to the News & Observer, it was drafted with the pending lawsuit in mind.

“He said the bill was indeed intended to address the Wilmington lawsuit, but he argues that he’s simply restoring the law to what it was before the 2019 bill,” according to the N&O.

Butler was reached for comment on the proposed bill as well as her thoughts on regulating short-term rentals.

“Striking a harmonious balance on this issue is a challenge because on the one hand, we want our property owners to be able to maximize their investment and to be able to earn money, as is their right. And at the same time, we don’t want to infringe on the quiet enjoyment of people who live in their homes,” she said.

The fight against the City of Wilmington has not been an easy one, but it is something the Schroeders are going to see through until the end.

“It makes me feel good that I get so many phone calls, emails, and texts from people that are in the same boat that we are. I mean, they’ve been hurt — by being shut down,” Dave Schroeder said.

The City of Wilmington filed a brief with the N.C. Court of Appeals in April claiming that these nine words the bill would strike allow them to interpret the law in two ways.

Those words?

“... under Article 11 or Article 12 of this Chapter.”

And those nine words are at the crux of the city’s argument.

“Due to the placement of this new text in the middle of the inspection statute, it can be read two ways. One reading preempts the registration provision of the City’s short-term rental zoning ordinance; the other does not. Below, the trial court only considered the preemptive reading,” according to the city’s brief to the appeals court.

But the Institute for Justice says the city’s argument citing these words just won’t work because they were not included in the law when the lawsuit was filed.

“The City’s new argument fails. This new language is irrelevant since, under North Carolina law, a subsequent change in state law cannot revive a local ordinance that was preempted at the time it was enacted. Even if the City were correct about the meaning of this amended statutory language, that would not save its ordinance. The City is arguing about the wrong law,” according to the IJ.

The Schroeders say they hope this entire lawsuit will be wrapped up by the fall of this year; but ultimately, that will be up to the courts and attorneys to decide.

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