Short-Term Rental Regulations in Dallas
Introduction to the Issue
A state appeals court says Dallas still can’t enforce rules that restrict where short-term rental properties listed on Airbnb, Vrbo and other platforms can operate in the city, doubling down on a similar opinion from February. This decision has significant implications for property owners and the city’s ability to regulate short-term rentals.
A Dallas district court judge in December 2023 approved a temporary injunction requested by a group of local short-term rental operators who sued the city over plans to ban the rentals in neighborhoods zoned for single-family homes and other rule changes. The Fifth District Court of Appeals in Dallas agreed with this decision in February, and city attorneys asked the appeals court to reconsider the case.
The Latest Opinion
In a revised opinion released Friday, Senior Justice Yvonne Rodriguez once again sided with the lower court’s decision to block Dallas’ enforcement of short-term rental regulations. She stated that the nonprofit Dallas Short-Term Rental Alliance and three property owners involved in the lawsuit would suffer “irreparable” harm if the rules were enforced.
“We conclude appellees — other than Danielle Lindsey — pled and proved a cause of action against the city, a probable right to the relief sought, and a probable, imminent, and irreparable injury in the interim,” the opinion said.
Background on the Lawsuit
Lindsey runs a short-term rental cleaning and maintenance business. The other three plaintiffs are owners of short-term rental properties. The Dallas City Council approved changes to zoning rules in June 2023 to ban short-term rentals in single-family neighborhoods, allow only one rental per single unit and require off-street parking.
They also mandated annual registration, fee and tax payments, adherence to occupancy and noise limits and having someone available to respond to emergencies within an hour. The core of the lawsuit revolves around property owners who argue the new rules illegally violate their property rights, while city officials argue they have the right to use zoning and other regulations to properly oversee short-term rentals operating in Dallas.
Reaction to the Decision
Lisa Sievers, president of the Dallas Short-Term Rental Alliance, told The Dallas Morning News that while the group is pleased with the latest opinion, it still wants to work with the city to create “a fair and sensible short-term rental ordinance.”
“We would welcome moving past the lawsuit and getting to the serious business of putting a reasonable ordinance in place that represents the interests of our membership as well as the neighborhoods in which we live,” Sievers said in a statement. “Meanwhile, we are busy preparing for the 2026 FIFA World Cup and are concentrating on rolling out the red carpet for our international guests and showcasing Dallas to the world.”
City’s Response
The city didn’t immediately respond Wednesday to a request for comment. The Dallas City Attorney’s Office in a statement says it’s considering next steps after the latest opinion.
“In the meantime, the city will continue enforcement of its existing ordinances governing minimum property standards, disturbing noises, and private nuisances, etc,” the statement said.
History of Short-Term Rental Regulations in Dallas
Dallas’ push for stricter rules followed years of debate on how to regulate short-term rentals, with many residents complaining about issues like gun violence, trash, noise, and other quality-of-life concerns linked to these properties. Many rental property owners have said they favored more regulations but opposed being banned from residential areas, fearing the rules would be too harsh and largely impact those who rely on the income and don’t have problem properties.
The appeals court in its updated opinion determined the short-term rental operators’ rights to lease their properties would be denied by the city regulations, that the zoning ordinance was likely unconstitutional because it denied the operators their property rights without due process, that the registration ordinance was likely unconstitutional because the city hadn’t proven a clear governmental interest for the rules and that the operators would likely face serious impacts from these rules because of the investments they made in their properties.
Comparison to Other North Texas Areas
Previously, Dallas had no rules to penalize problematic operators. Property owners were supposed to register and collect taxes from guests, but there were no consequences for noncompliance. Dallas officials also don’t know exactly how many short-term rentals operate in the city.
Legal challenges to short-term rental restrictions in other North Texas areas have not recently favored rental operators. A Tarrant County district court judge ruled in March that Fort Worth could continue enforcing similar regulations, which make it illegal for short-term rentals to operate in residential areas. Another Tarrant County judge ruled in favor of Grapevine officials that same month, allowing them to enforce similar restrictions.
State Legislation
Gov. Greg Abbott also signed a bill passed by the Texas Legislature into law last month that prevents cities from banning certain home-based businesses, requiring them to have special licenses or permits, or forcing property owners to rezone their property for nonresidential use. But among the exceptions to House Bill 2464 are short-term rentals.
“This section does not prohibit… a municipality from adopting or enforcing an ordinance regulating the operation of a short-term rental unit,” the bill says. The law takes effect on Sept. 1.
Conclusion
In conclusion, the latest opinion from the appeals court has significant implications for the short-term rental industry in Dallas. While the city is considering its next steps, the Dallas Short-Term Rental Alliance is open to working with the city to create a fair and sensible ordinance. The issue of short-term rental regulations is complex and contentious, with different stakeholders having different opinions on how to balance property rights with quality-of-life concerns.
Frequently Asked Questions
Q: What is the current status of short-term rental regulations in Dallas?
A: The current status is that the city cannot enforce its rules restricting where short-term rental properties can operate, due to a temporary injunction granted by a district court judge and upheld by an appeals court.
Q: What are the main arguments of the property owners and the city in the lawsuit?
A: The property owners argue that the new rules violate their property rights, while the city argues that it has the right to use zoning and other regulations to oversee short-term rentals and address quality-of-life concerns.
Q: How do the regulations in Dallas compare to those in other North Texas areas?
A: The regulations in Dallas are currently more restrictive than those in some other North Texas areas, such as Fort Worth and Grapevine, where similar regulations have been upheld by courts.
Q: What is the impact of the new state law on short-term rental regulations?
A: The new state law prevents cities from banning certain home-based businesses, but it specifically exempts short-term rentals, allowing cities to continue regulating them.
