Texas Court Strikes Down Occupancy Limits and Party Rules On Short-Term Rentals

The Texas Third Court of Appeals has ruled that the City of Austin unconstitutionally infringed private property rights by restricting occupancy and limiting parties at houses rented through sites like Airbnb.

The court voided a section of the City Code that established occupancy limits on short-term rentals and regulated assembly on the premises of such a rental.

Under § 25–2–795 of the City Code, the now voided section, not more than two adults per bedroom plus two additional adults are allowed to be present in a short-term rental between 10:00 p.m. and 7:00 a.m.

The ordinance also stated, “A licensee or guest may not use or allow another to use a short-term rental for an outside assembly of more than six adults between 7:00 a.m. and 10:00 p.m.” No gathering is allowed in the nighttime hours between those two times, the ordinance adds.

“For purposes of this section, an assembly includes a wedding, bachelor or bachelorette party, concert, sponsored event, or any similar group activity other than sleeping,” the ordinance states.

The court today said this section of the City Code “plainly restricts the right to assemble and does so without regard to the peaceableness or content of the assembly.”

In a majority opinion authored by Chief Justice Jeff Rose, the court stated, “Section 25–2–795 represents a significant abridgment of the fundamental right to peaceably assemble — i.e., to get together or congregate peacefully.”

However, the court left untouched certain other sections requiring licensing and subjecting short-term rentals to other regulations. Justice Rose stated, “We do not suggest that the City of Austin is powerless to regulate short-term rentals or to address the possible negative effects of short-term rentals — in fact, it already does so with various nuisance ordinances.”

He went on to cite existing City Ordinances, including the noise ordinance and public urination and defecation ordinance, as well as state law addressing disorderly conduct and public intoxication.

Justice Rose said the City would need to demonstrate “a compelling interest” to justify its restrictions on the right to peaceably assemble on private property, which it has not done.

In a dissenting opinion, Justice Chari Kelly argued that the Texas Constitution’s guarantee of a right of assembly isn’t meant to refer to private functions like a bachelor party.

“The Texas Constitution… did not recognize an unfettered right to assemble for whatever purpose and in whatever manner at whatever time of day, as the majority opinion suggests. It instead limited that right to assemble in two important ways: it must be peaceable, and it must be for the citizens’ common good,” she wrote.

Justice Kelly added, “The City of Austin has passed limitations on certain short-term rentals that on their face have nothing to do with assembling for the common good to participate in civic discourse. The City believes it has evidence to support that short-term rentals give rise to non-peaceable assemblies disconnected from citizens’ common good. The City’s restrictions, then, are assembly-neutral zoning regulations that have a rational basis.”

The Texas Public Policy Foundation, a conservative Austin think tank that filed an amicus brief in the case in support of the plaintiffs, declared the ruling a victory for private property rights.

“In striking down the Austin ordinance ban on short-term rental use and the restrictions on guest activities within a private residential setting, the Third Court of Appeals stopped the overreach by the City of Austin,” said TPPF’s General Counsel Robert Henneke.

The City of Austin responded to the ruling saying it was “disappointed” and weighing its legal options, the Austin Business Journal reported. The City could appeal to the Texas Supreme Court. However, the Third Court of Appeals has the lowest reversal rate at the high court of any of the state’s appellate courts.

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