Short-Term Rentals

How your state handles short-term rental regulations will depend on whether your state follows the doctrine of “Home Rule” or “Dillon’s Rule.” Those doctrines are explained below.

The United States Constitution does not specify powers given to local governments. The tenth amendment reserves those powers to the states. Therefore, each state decides what powers it will designate to the local government. It does so by state constitution or statute. Although the states vary significantly on the authority delegated to their local governments, it generally falls within one of two categories: Dillon’s Rule or Home Rule. In some states, it may be a combination of both.

Dillon’s Rule (named after Judge Dillon, who decided an Ohio 1868 court case and upheld by the U.S. Supreme Court) follows a narrow interpretation of the local government’s power. A local government only has powers expressly given by the state through the state constitution or statute. On the other hand, a state operating under Home Rule allocates autonomy to local governments. If there is a dispute as to whether a particular authority is held by the local government or the state, under Home Rule, it is generally decided in favor of the local government. Under Dillon’s Rule, it is generally decided in favor of the state. If your state operates under Dillon’s Rule, unless expressly authorized by the state, your local government may have limited authority to regulate short-term rentals.

The doctrine of state preemption further complicates matters. The state may preempt a local government’s authority. If, for instance, that state’s constitution adopted some form of the “Home Rule Doctrine,” the state may enact a statute to remove the local government’s authority. If that happens, the issue may ultimately be decided by the State Supreme Court.