Legal Question in Real Estate Law in Indiana

Town trying to stop vacation rentals

Two years ago, we rented a vacation rental house at a beach town in Indiana for a week and liked the town so much we bought a house there with the intent of living there part time and renting it by the week during parts of the summer that we are not there. There are about half a dozen houses in the town that advertise for rent by the week or weekend. I found out that the town council is now about to send letters to all of the vacation rental owners saying that short term rentals (less than 30 days) require collecting sales tax (questionable) and therefore short term rentals are prohibited in an R1 zone as commercial activity. Their municipal code apparently does not directly prohibit short term rentals in an R1 zone, only by that indirect logic regarding the applicability of sales tax. I notice however that many home businesses of other sorts advertise in the town sponsored directory. Does the town's line of legal reasoning hold water? Would the fact that several owners have been publicly advertising and renting by the week for a number of years without any notice of violation give us any rights to continue to do so? Is there an issue regarding selective enforcement if they don't also stop other home business activities?


Asked on 4/15/07, 8:30 pm

1 Answer from Attorneys
Mark Voigtmann Baker & Daniels

Re: Town trying to stop vacation rentals

Home occupations are treated differently under zoning than short term rentals would be. Therefore, the town may be in the right on this one. Another immediate reaction would be that R1 is single family residential, and if the property is being used for short term rentals, it is really a guest house, which probably is a permitted use under another zoning classification. We are not at all certain whether there is any relevance to the sales tax issue - unless the fact that the property owners are collecting and remitting sales tax is evidence of use as a guest house. This is first blush reaction. If you or your neighbors would like to arrange for legal counsel on this matter, please feel free to contact me at [email protected]. Thanks for your question.

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Answered on 4/16/07, 9:56 am


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