License to Rent

By Nicole Killoran

In re Toor, 2012 VT 63.

As members of the bar who dabble in municipal law well know, a zoning case often boils down to BANANA-NIMBY: Build Absolutely Nothing Anywhere Near Anything, and most certainly Not In My Back Yard.  These cases usually boil down to a question of how to interpret a town’s zoning bylaws.  But underlying the textual analysis of every zoning appeal is a pissed off neighbor (or several), usually someone rich enough to hire an attorney to challenge his neighbor’s activities.  Today’s case is no exception.

The setting for today’s case is Grand Isle.  The subject property is a vacation home with sleeping accommodations for 15 located at the north end of Ladd Point— the “gateway” to Lake Champlain.  Defendants are Californians who have in the past used their enormous seasonal playhouse as an entertainment and gathering hub.  Defendants also allowed friends and family borrow the use of the property on occasion.

As it turns out, large five-bedroom properties with private access to an inland freshwater sea are expensive to maintain.  They are also prime targets for municipal listers who tend to price such properties on the high end to reap the tax benefits of having such rich, seasonal residents. . . I mean because of their inherent fair market value.  In 2009, Defendants decided to rent out their vacation home on a temporary basis to offset these costs, and did so eleven times during the summer and fall seasons.

In September 2009, Defendants caught the eye of the Grand Isle Zoning Administrator, who slapped them with a notice of violation.  The Zoning Bylaws allow landowners in Defendants’ zone to use their property as a bed and breakfast or a boarding house, but Defendants had not sought a change of use permit first.  Defendants had illegally “developed” their property into one of these two business types without a piece of paper saying they could.

Defendants appealed this violation notice to the Development Review Board (DRB), who agreed with the Zoning Administrator that Defendants should have obtained a permit before renting.  But The DRB went one step further, and demanded that Defendants obtain a permit not because they were operating as a B&B, but because they were no longer using the property as a “single-family dwelling,” which the Town’s bylaws defined as a structure occupied by “one (1) or more persons living as a household unit . . . .”  The DRB based this decision on its own interpretation of “household unit,” which it defined as a “group of persons who regularly share a family-like household living arrangement.”

Defendants appealed the DRB’s decision to the Environmental Division of the Superior Court.  The trial court agreed with the Town that Defendants were no longer using the property as a “single-family dwelling,” and expanded on the Town’s interpretation of the phrase.  According to the trial court, the character of the tenants’ stay and the financial arrangements or lack thereof with Defendants altered the use such that it was no longer a “single family dwelling,” but it was not a B & B either.  Defendants rented sporadically to groups of people, “impermanent[t] in composition,” and used their property as “an income-producing short-term rental.”  Thus, Defendants needed to define the use and seek the proper permit.

You may have already gathered that this case boils down to the interpretation of a single seemingly innocuous phrase in the Grand Isle Zoning Bylaws: “single family dwelling.”  Though this may seem like an obscure definition hunt, such textual construction, in fact, makes up a large chunk of what goes into a judge’s decision-making process.  As Judge Richard Posner reminds us, the task of a judge asked to interpret the meaning of a vague law is to fill in the blank spots where the lawmakers could not agree or did not foresee. 

In this particular case, the pivotal phrase, “single family dwelling,” is defined in the Bylaws as “[l]iving quarters with cooking, sleeping and sanitary facilities provided within a dwelling unit for the use of a single family maintaining a household.”  A “dwelling” is “designed or used as the seasonal or permanent living quarters” for a single family.  A “single family” means one or more persons “living as a household (dwelling) unit, but not including individuals or groups occupying rooming and boarding houses, clubs, motels or hotels.”

Zoning laws are “in derogation of common law property rights,” which is a fancy way of saying that a town’s right to stop a landowner is limited to specific power of the zoning bylaw.  Step outside of that power, and the town is a proverbial dangling coyote. 

The SCOV doesn’t dig very far before it concludes that the trial court got it wrong. 

Like any good review, the SCOV starts with the foundation and lays out a series of mini-conclusions on which it builds its later conclusions.  So first, the SCOV notes that  the structure of the Defendants’ house appears to match the bylaws’ definition of “single-family dwelling”: a single kitchen, dining area, and living room, plus places to sleep and a bathroom. 

Next, the SCOV notes that Defendants and any renters have used the property in the same manner: as a vacation home and gathering place for their family and friends.

The SCOV takes note that the procedural history of this appeal was perhaps too Darwinian.  Over the course of the successive appeals from the Zoning Administrator to the DRB to the trial court, the theory of the case kept evolving from a simple failure to obtain a permit to a larger and larger question about the nature of Defendants’ use of the property. 

On top of all that, the SCOV notes that the DRB further complicated the whole thing by including the word “regularly” to its definition-on-the-fly of “household unit,” which adds a whole new layer to its meaning and technically excludes even Defendants’ own personal use of the property from the definition of “single family dwelling.”

Based on this, the SCOV concludes that by the time the case got to the trial court, the matter was so confused that the trial court picked up the issue and ran with like Roy Riegels in the wrong direction. 

From here, the SCOV picks apart the trial court’s definition. 

The composite definition of “single family dwelling” the trial court came up with seems to exclude commercial use in the district—even though the Town’s Bylaws allow B&Bs and boarding houses. 

The definition also emphasized the impermanence and composition of the occupants, factors the SCOV does not see in the Bylaws’ written definitions.  It matters little whether tenants stay for a weekend or a week, or whether they are part of the same family or a gathering of friends.  For the purposes of the bylaws, the composition of the occupants at any given time was essentially one household, regardless how impermanent.

Nor does it matter whether the “intensity” of use is higher than the allowed semi-commercial uses, a point raised by the “interested” neighbors in the action.  The SCOV refuses to find that Defendants’ vacation rentals involve any more use than a B&B or boarding house, both allowed.

In the end, the SCOV reverses the trial court’s decision and dismissed the notice of violation.

But this seems like a hard stop for the Town and the neighbors who joined the appeal out of a concern that Defendants’ unregulated use of the property could bring carloads of renters, Republicans, and other undesirables that would undermine “the permanence, stability, and quiet seclusion of their lake-front properties.”  

The SCOV offers this cold comfort.  Zoning decisions must create an easily ascertainable standard for future landowners to follow.  If Defendants’ violations had been upheld, they stood to incur large fines.  That is fine and good, but the basis was the violation of a rule that came out of the DRB’s and the trial court’s decisions that any future landowners would struggle to follow.  Such a blurry line would likely cause landowners and others to simply avoid renting to anyone in the future.  If the Town and the neighbors want such limits, then they need to take this issue back to the Planning Commission and clean up the bylaws and fill-in the blank spots to create a broader, general standard for landowners to follow.  That is not the role of the courts or a notice of violation action.   

Translation: “take your ball and get off my lawn.”