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| Town of Ogden Dunes |
The Siwinskis own a home in Ogden Dunes, a popular resort area in Northern Indiana. The Siwinskis' home is located in a residential (R) district of the town. The Siwinskis, who rented out their home, were fined for being in violation of the following ordinance:
In an R District, no building or premises shall be used and no building shall be erected which is arranged, designed or intended to be used for other than one or more of the following specified uses: (1) single-family dwellings; (2) accessory buildings or uses; (3) public utility buildings; (4) semi-public uses; (5) essential services; (6) special exception uses permitted by this Zoning Code.The Town also defines a "single-family dwelling" as a "separate detached building designed for and occupied exclusively as a residence by one family."
The question before the Court was whether this ordinance and the accompanying definition meant that a homeowners could not rent out their property short term. The trial court agreed with the Town that the ordinance language "occupied exclusively as a residence by one family" prohibited the owner from renting out the property on a short-term basis. This was deemed a "commercial" use inconsistent with the residential zoning.
The Court of Appeals, however, in a 3-0 decision, ruled that even though the Siwinskis profited financially, renting the property to another family constituted a residential use of the property. In a 4-1 decision, the Indiana Supreme Court disagreed, holding the Siwinskis' use of their property as a rental was commercial and not residential, and that the Town was within its authority to prohibit the Siwinskis from renting their property and for fining them for doing so.
Justice Sullivan of the Indiana Supreme Court dissented, simply saying he agreed with the Court of Appeals' decision. So do I. First, I don't think renting a house out as a residence is a commercial use. The Court of Appeals explained why in its decision:
In Applegate v. Colucci, 908 N.E.2d 1214 (Ind. Ct. App. 2009), trans. denied (2010), this court analyzed whether a restrictive covenant, which specified that the parcels were to be used for residential purposes only and prohibited commercial business while specifically not preventing the leasing or renting for residential use, prohibited a property owner from the short-term rental of his cabins. Citing long-standing precedent, we concluded that a “residential purpose” is “one in which people reside or dwell, or in which they make their homes.”The Court of Appeals also noted the legal principles which apply to interpreting a zoning ordinance:
“Because zoning ordinances limit the free use of property, they are in derogation of the common law and must be strictly construed.” [O]ur courts interpret an ordinance to favor the free use of land and will not extend restrictions by implication.” Therefore, when a zoning ordinance is ambiguous, it should be construed in favor of the property owner. (Citations omitted.)The application of the Ogden Dunes zoning ordinance is in derogation of property rights. As such, the ordinance should have been strictly construed with any doubt decided in favor of the Siwinskis. Restrictive covenants and zoning ordinances are strictly interpreted because people who are considering buying property need to know any limits on the use of that property that could affect its value. To prohibit the Siwinskis from renting their property, especially in a resort area like Ogden Dunes, is to negatively affect its value.
Unless it is crystal clear that the Ogden Dunes ordinance prohibits rentals, which doesn't appear to be the case, the Indiana Supreme Court should have found in favor of the Siwinskis.