Fifth Circuit finds no protected property interest in short-term leasing under Texas law
Fifth Circuit finds no protected property interest in short-term leasing under Texas law
2026-09-19 · Texas · Courts
What happened. On 18 June 2026 the United States Court of Appeals for the Fifth Circuit decided Marfil v. City of New Braunfels, Texas, No. 25-50025, affirming summary judgment for the city. Judge Stephen A. Higginson wrote for a panel that also included Judges Willett and Engelhardt.1
The claim, and the court's answer
The plaintiffs owned property in New Braunfels and challenged the city's zoning ordinance regulating short-term rentals in certain residential districts — an ordinance, the opinion notes, “enacted years before any Appellant purchased their property.” They argued it violated the Due Process and Equal Protection Clauses of the United States and Texas Constitutions.
The opinion states the disposition in its opening paragraphs:
“Their due process claim rests on the premise that Texas law recognizes a protected property interest in ‘the right to lease one's home on a short-term basis.’ Texas courts, however, have held that it does not. We further hold that the Ordinance survives rational-basis review under the Equal Protection Clause. The district court's judgment is accordingly AFFIRMED.”
The ordinance at issue
The opinion traces the regulation to the city's 2006 comprehensive zoning ordinance, New Braunfels, Tex., Ordinances ch. 144, § 1.1 et seq. (Nov. 8, 2006). Section 5.16, entitled “Short term rental or occupancy in one and two unit dwellings,” restricted occupancy of such dwellings “for less than 30 consecutive days” outside certain commercial districts absent a special use permit.
The 30-day line is the same threshold that recurs across Texas short-term rental disputes, including those fought over private covenants rather than zoning.
Why a zoning case matters to association law
This is not an association case, and it is worth being clear about that. New Braunfels is a city exercising zoning power, not a property owners' association enforcing a covenant, and the constitutional claims raised against a municipality have no direct analogue against a private association.
The reason it lands in the same conversation is the premise the court rejected. The plaintiffs' due-process theory required a protected property interest in short-term leasing as distinct from leasing generally. The Fifth Circuit's answer — that Texas courts have held there is none — is a statement about Texas property law rather than about municipal power, and Texas property law is what supplies the background against which covenant disputes are decided.
The case procedurally is an old one: the district court docket number is 6:20-CV-248 in the Western District of Texas, meaning the litigation ran roughly six years to reach this point.
Two rulings, six days apart
The decision arrived six days after the Supreme Court of Texas denied review in Martin v. Swan Point Landing Community Association, leaving in place a published Thirteenth Court of Appeals decision upholding an amended covenant restriction on short-term rentals.2
Texas short-term rental regulation therefore runs on two independent tracks, and June 2026 produced an appellate result on each. A municipality may restrict short-term occupancy through zoning; an association may restrict it through a validly adopted amendment to its declarations. The two are not alternatives — a property can be subject to both, and compliance with one says nothing about the other.
The rational-basis holding
The equal-protection half of the decision applied rational-basis review to the distinction the ordinance draws between short-term and long-term leasing. That standard asks only whether the classification is rationally related to a legitimate government interest, and it is the standard that applies where no fundamental right or suspect class is involved — which follows directly from the due-process holding that no protected property interest exists.
What to watch next
The opinion is a published Fifth Circuit decision, so it binds federal district courts in Texas, Louisiana and Mississippi. What it does not do is settle how a Texas court treats a short-term rental restriction arriving through a covenant amendment rather than an ordinance — that question runs through the Hanchett line of Texas cases, and Swan Point Landing is the most recent published word on it.
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