Wisconsin Short-term Rental Update

The Wisconsin Court of Appeals recently issued another significant decision interpreting Wisconsin's "right to rent" law, Wis. Stat. § 66.1014. In Hunter Clinton, et al. v. Village of Sister Bay, the court held that a village ordinance limiting short-term rentals (STRs) to no more than four bedrooms is preempted by state law and therefore unenforceable.

The Village of Sister Bay amended its zoning ordinance in 2023 to prohibit owners of STR properties from renting more than four bedrooms unless the plan commission approved an exception. The ordinance applied even to existing five- and six-bedroom homes that had previously been rented as STRs. Property owners challenged the restriction, arguing that it conflicted with Wisconsin's right to rent law.

The case also highlights the value of the WRA Legal Action Program. Through the program, the WRA filed an amicus curiae brief, also known as a “friend of the court” brief, supporting the property owners and advocating for a consistent interpretation of Wisconsin's right to rent law. The WRA argued that the statute protects the rental of an entire residential dwelling, including all of its bedrooms, and that existing Court of Appeals precedent required the village ordinance to be invalidated.

The Court of Appeals agreed.

The court relied heavily on its earlier decisions in Wisconsin REALTORS^® Association v. City of Neenah and Wildwood Estate, LLC v. Village of Summit, concluding that municipalities cannot adopt local regulations that prohibit the rental of all or part of a residential dwelling in a manner that conflicts with Wis. Stat. § 66.1014. The statute defines a "residential dwelling" to include "any building, structure, or part of the building or structure" used as a residence. Because the village's ordinance prohibited the rental of the fifth and subsequent bedrooms, the court concluded that it effectively prohibited renting part of a residential dwelling, which is a restriction state law does not permit.

The court emphasized that municipalities retain authority to regulate STRs through licensing and other regulations that do not conflict with state law. However, they may not prohibit the rental of portions of an otherwise lawful residential dwelling. As a result, the court declared the four-bedroom limitation void and remanded the case for entry of judgment consistent with its decision.

Why this matters

This decision continues the Court of Appeals' broad interpretation of Wisconsin's right to rent law. Together with the Neenah and Wildwood decisions, the case reinforces that local governments have limited authority to restrict STRs beyond the specific regulations authorized by state law

For REALTORS^®, the decision is another reminder that local STR ordinances should be reviewed carefully. While municipalities may require licenses and regulate certain operational aspects of STRs restrictions that effectively prohibit renting an entire home or part of an otherwise lawful residential dwelling may be subject to legal challenge under Wisconsin's right to rent law.

Find out more about the role of STR properties in Wisconsin by visiting the WRA’s short-term rental resource webpage.