Court Sides With Homeowners in Miami Beach Dispute Over Short-Term Rentals

Florida’s Third District Court of Appeal on Wednesday affirmed a lower court ruling in favor of a homeowner and rejected the arguments made by the City of Miami Beach in a dispute over a short-term rental.

The conflict involved Miami Beach shutting down utility service to 3098 Alton Road LLC after the city alleged the property owner had not paid fines exceeding $200,000 for operating an Airbnb rental on its property, according to court documents. The property was effectively shut down because it became inhabitable without those water and sewer services.

The ruling comes amid a larger trend of cities seeking to regulate short-term rentals, such as those facilitated through Airbnb, instead of allowing the State of Florida to control enforcement. Homeowners and state government officials have said cities are not equipped to handle the enforcement of short-term rentals.

Now, the property owner is planning to ask the court for a damage award in the six-figure range for lost income for the period during which the property was uninhabitable. It will also seek attorney fees and compensation for damages to the home while the utilities were shutdown.

On appeal, Miami Beach raised several challenges, including that it had the authority to deny utility service based upon the Code of the City of Miami Beach. the Third DCA opinion stated.

That led Miami Beach to assume that in providing or regulating water utility services, the city could exercise its propriety powers and be governed by the same laws and exercise the same rights as a private corporation in a similar situation.

The opinion noted that Florida law has long recognized that courts may interfere with the power “exercised by a town council in the management of its utilities where it exhibits bad faith, fraud, arbitrary action or abuse of power.”

The amended complaint alleged Miami Beach, as of October 2017, had imposed upon homeowners more than $6.5 million in fines in connection to the ordinance it cited in this case.

Read the Third DCA opinion:

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Miami Beach’s counsel Raul J. Aguila did not respond to a request for comment by press time.

The Third DCA opinion found that Miami Beach erred when it raised City Code section 110-37. Miami Beach argued that the property owner had not paid the accrued fines resulting from his alleged violation of short-term rental ordinance prohibiting commercial use of the property.

Miami Beach claimed the fines fell within the meaning of “bill, account or charge,” which entitled it to discontinue water service.

The Third DCA disagreed and stated because the construction of City Code section 110-37 is dispositive and favors the property owner, the lower court had properly ruled in the property owner’s favor.

Christopher B. Spuches, a partner at Agentis PLLC in Coral Gables, said it was clear that violation of short-term rental ordinances have consequences, but turning off the water was not one of them.

“We’re very happy that the homeowner had their utilities restored,” Spuches said. “But also that future homeowners don’t have to be abused by the City of Miami Beach in this manner anymore.”