Why a municipal case matters to a Michigan association board

Because the takings theory, if it succeeded, would not stop at municipalities — and because the case is a clean test of an argument owners make to boards constantly.

The argument is: I bought this property and operated it as a short-term rental; taking that use away destroys value I paid for; you have to grandfather me. Michigan associations hear a version of that every time they amend a declaration to restrict rentals.

Against a private association the constitutional claim does not run — a homeowners association is not the state, and the Fifth Amendment does not reach it. But the equitable version of the argument does get traction in covenant cases, through reliance, waiver, estoppel and the amendment's own retroactivity.

How the grandfathering question reads for Michigan associations

Michigan gives no clear rule on whether a rental restriction adopted by amendment binds an owner who bought before it. The safest practice, and the one that avoids most litigation:

• Say what the amendment does to existing uses, in the amendment. Silence is what produces the fight. Whether you grandfather or not, write it down.
• If you grandfather, define the terms. Personal to the owner or running with the land? Lost on sale, on a lapse in use, on a change in the number of units rented?
• Confirm the amendment threshold and the notice against the declaration before the vote, not after the suit.

The state-level context

Michigan has no statewide short-term rental statute. Local control is what exists, and it is being litigated: Dearborn Heights was separately defending its own ban in federal court as of June 2026.

Two pending bills would change the framework. House Bills 6026 and 6027 would create a statewide registry and a 6% excise tax, and bar a local government from banning short-term rentals outright — which would put Dearborn's ordinance in direct conflict with state law and moot most of this litigation. Both are in House Government Operations with no hearing.

Neither bill touches a private covenant. An association's rental restriction would survive whatever happens to Dearborn's ordinance.

The covenant law running alongside it

Michigan's private-law position is separately unsettled. The Supreme Court split 3–3 in July 2025 on whether a “single family residence purposes” covenant bars short-term rentals, leaving an unpublished decision standing. A different panel then held that even a nine-month lease was a prohibited commercial use.

The older municipal line is clearer. Reaume v Township of Spring Lake, Mich Sup Ct No. 159874 (order, June 2020), held a township could exclude short-term rentals from an R-1 district by fitting them within its own “motel” definition — that is the authority Michigan zoning decisions lean on, and it is what Dearborn is defending behind.

What to watch next

A ruling on the city's likely motion to dismiss. A regulatory-takings claim against a zoning ordinance is a hard claim to plead, and the plaintiffs' stronger ground is probably the absence of grandfathering rather than the ban itself. The underlying complaint and Ordinance 24-1845 are both public records and worth reading before anyone treats a news summary of either as reliable.