Wednesday, March 30, 2016

City Rent Restriction, Inability To Lease Home Leads To Foreclosure For Army Contractor's Single Family Home While He Was Serving In Iraq; Prospective Buyer Rejected Purchase After Learning Of Restriction; State Supreme Court Declines To Hear Appeal Challenging Local Statute, Says Loss Of Home Moots Issue

In Winona, Minnesota, Fox News reports:
  • Homeowners, beware.

    Property rights advocates say the right to rent is being threatened at the local government level, as cities across the country push restrictions on exactly how and to whom Americans can lease out their lofts and living quarters.

    The California city of Ojai earlier this year voted to make all rentals under 30 days illegal, according to a recent report. Airbnb rentals have faced regulatory challenges everywhere from New York to San Francisco. And several Minnesota cities have imposed limits on renting, drawing legal challenges but no resolution in the courts.

    “This is about the ancient right to be left alone,” Institute for Justice attorney Anthony Sanders told Fox News. “Regulations on rental properties are allowed, but to completely prohibit someone from renting out their property to another law-abiding citizen? There are huge constitutional problems with that.”

    The institute, a national law firm, is representing Ethan Dean in his case against the city of Winona, Minn.

    Dean, who completed five tours as a U.S. adviser and Army contractor with the Human Terrain System in Afghanistan and Iraq, owned a three-bedroom home near Winona State University. While he was on his fourth mission in Afghanistan between 2011 and 2012, he arranged to rent his home to students of the university.

    “I started getting nasty notes from the government while I was in Iraq,” Dean told Fox News. “The notes were from the city treasurer telling me that it was illegal to rent out my home. I had no idea what they were talking about.”

    He then learned officials in Winona imposed a restriction on the number of homeowners who can rent out properties in specific neighborhoods. According to Dean, Winona explained a “30 Percent Rule” -- allowing only 30 percent of homes in a neighborhood to be rentals. Dean’s block was 78 percent rental properties when the ban was enacted, but his neighbor’s permits were apparently grandfathered in.

    “They told me I had to kick the kids out of my house, and if I didn’t, I’d be fined $450 a day,” Dean said. “But I let the kids stay there another six months. The emails continued to come to me in Iraq.”

    Sanders said this regulation restricted Dean from even selling his home, as any time a potential homebuyer expressed interest, they quickly backed out after learning the house was not rental-certified.

    Rules regarding renting property to students reach into neighborhoods and cities across the country.

    Just last fall, the city of Hamden, Conn., proposed requirements for landlords to obtain certain permits in order to rent to college students.

    The government is potentially forcing people into foreclosure,” Sanders said.

    The case in Winona was decided on behalf of the city in the lower courts, but during the time the case went into appeal, Dean lost his home to the bank.

    Dean was on his fifth tour in Afghanistan and, unable to rent out his property, struggled with the mortgage. “I couldn’t rent it, and I couldn’t come back and live in it. I was in Afghanistan serving our country.”

    Representatives with the city of Winona and their attorneys have not responded to requests for comment from Fox News.

    Winona’s official court brief did, however, say the city had the authority to enact the 30 Percent Rule due to its broad police powers, claiming this rule was a reasonable way to deal with housing problems created by college-student renters.

    After Dean lost again, the case eventually ended in the Minnesota Supreme Court – where, in August 2015, the court claimed the case was moot because the bank owned Dean’s home at that point. The matter is still up in the air in Minnesota, as the courts did not decide on the constitutionality of the rule.

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