Idaho Supreme Court Strikes Down City's Ban on Non-Owner-Occupied Vacation Rentals

On May 21, 2025, the Idaho Supreme Court reversed a district court decision by holding that a local ordinance restricting short-term rentals based on owner occupancy violated Idaho's state-wide short-term rental statute. While the state statute allows municipal regulation of short-term rentals, the court held that the ordinance’s requirement of manager or owner occupancy amounted to an express prohibition in violation of state law.

When interpreting a statute, Idaho courts should consider all applicable statutes to determine the legislature’s intent. Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction.

In Idaho, short-term rentals are governed by the Short-term Rental and Vacation Act (the “Act”), which expressly prohibits a municipality from enforcing any ordinance that has the practical effect of prohibiting short-term rentals. The Act applies to rentals in a single-family dwelling, units in a condominium/apartment building, and owner-occupied residential homes. The Act allows municipalities to implement reasonable regulations to safeguard the public health, safety and general welfare in order to protect the integrity of residential neighborhoods in which short-term rentals are operated.

John and Michelle Taylor own property in a residential zone in Lava Hot Springs (“City”), a small resort town in southeastern Idaho with fewer than 400 residents and more than 400,000 visitors each year. In 2006, the City amended its zoning ordinance to prohibit short-term rentals in residential zones unless the property was owner-occupied, defined as bed and breakfast short term rentals. The zoning ordinance only permitted non-owner-occupied vacation rentals in its commercial zones.

The Taylors applied for a business license with the City to operate a non-owner-occupied vacation rental. The City Council denied the application pursuant to the ordinance because the home was not in a commercial zone.

Following the denial, the Taylors and the Idaho Association of REALTORS® sued the City, seeking a declaratory judgment that the ordinance violated the Idaho Constitution and exceeded the City's statutory authority under the Act. They argued that the ordinance conflicted with state law because it effectively prohibited non-owner occupied properties from operating a short-term rental, one type of property included in the Act. The City argued the prohibition on residential non-owner occupied rentals fell under its regulatory discretion and was consistent with the Act because short term rentals were not completely prohibited in the City’s residential zones. The district court ruled for the City, finding that the ordinance fell under the City’s regulatory authority and had not prohibited short-term rentals because owner-occupied rentals were still allowed in residential zones.

On appeal, the Taylors and the Idaho Association of REALTORS® argued that allowing one type of short-term rental did not allow the City to prohibit another.

The Idaho Supreme Court agreed with the Taylors and the Idaho Association of REALTORS® and reversed the district court. The court focused on multiple sections of the Act found in different areas of the Idaho Code, finding that the legislative intent was to foster access to short-term rentals by limiting governmental authority and to preserve private property rights. The court construed the Act’s plain language as prohibiting municipalities from enacting regulations that expressly or effectively eliminate any category of property from operating a short-term rental.

The court acknowledged the City's concerns about density and neighborhood character but ultimately held that the ordinance was a violation of the Act. The court awarded costs on appeal to the Taylors and the Idaho Association of REALTORS®.

Idaho Association of REALTORS®, Inc. v. City of Lava Hot Springs, 569 P.3d 496 (Idaho 2025).pdf