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Wisconsin Justices OK Lakefront Short-Term Rental

Rejecting complaints from neighbors, the Wisconsin Supreme Court ruled Tuesday that a family can rent out their waterfront property on Hayward Lake to vacationers.

MADISON, Wis. (CN) – Rejecting complaints from neighbors, the Wisconsin Supreme Court ruled Tuesday that a family can rent out their waterfront property on Hayward Lake to vacationers.

Neighbors filed a lawsuit in 2016 against Lee and Mary Jo Neuschwander, who have been renting out their lakefront property in Hayward, Wis., advertised as “Lake Point Lodge,” since 2014 as a short-term vacation home.

The neighbors, represented by Linda Coleman of Carlson & Coleman, argued the rentals violate a restrictive deed covenant everyone in the neighborhood adheres to, which dictates “there shall be no commercial activity on any of said lots.”

They say that the Neuschwanders’ rental property brings “a new party every week, with a huge group of people who are ready to cut loose and have a good time in a neighborhood they don’t know and they have no connection to.”

The trial court sided with the neighbors and ruled the Neuschwanders’ short-term rentals violated the covenant’s prohibition against commercial activity and ordered an injunction barring further rentals, except during the weekend of North America’s largest cross country ski race, the American Birkebeiner.

Attorney Anne Berleman Kearney of Appellate Consulting Group filed an appeal on behalf of the Neuschwanders and the Wisconsin Court of Appeals reversed last year, finding that public policy favors free and unrestricted use of property. It deemed the restrictive covenant to be ambiguous as to whether the ban commercial activity on the neighborhood lots was meant to preclude short-term rentals.

In a 6-1 decision Tuesday, the Wisconsin Supreme Court affirmed the ruling in favor of the Neuschwanders after hearing oral arguments in February.

Chief Justice Patience Roggensack penned the majority’s 12-page opinion upholding the finding that the restrictive covenant over the property is not clear as to home rentals.  

“We conclude that the term, ‘commercial activity,’ which is undefined in the covenant, is ambiguous. Therefore, we narrowly interpret it and conclude that it does not preclude either short-term or long-term rentals of Neuschwanders' property,” Roggensack wrote.

All justices concurred with Tuesday’s opinion except Justice Ann Walsh Bradley, who wrote an eight-page dissent saying the Neuschwanders' rental of the house is clearly a commercial activity prohibited by the covenant.

“The Neuschwanders purchased the property in 2014, renovated it, and have primarily rented it out to vacationers. In 2015, the Neuschwanders received $55,784.93 in rent including taxes and paid $4,973.81 in room tax to the city of Hayward. To run such a lucrative enterprise is, in my view, plainly ‘commercial activity.’ It relates to commerce and has profit as its chief aim,” Bradley wrote.

Attorneys for the Neuschwanders and their neighbors did not immediately respond Wednesday to email requests for comment on the ruling.

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Categories / Appeals, Business, Regional

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