Arizona Appeals Court Blocks Local Home-Sharing Ban

Court Sides With State Law

PHOENIX — Arizona cities cannot ban homeowners from renting out their residences as short-term or vacation rentals, the Arizona Court of Appeals ruled, rejecting a local effort by the city of Sedona to limit home-sharing in a mobile-home community.

The court said state law clearly prevents municipalities from imposing blanket bans on short-term rentals. The ruling reinforces a 2016 statute that made Arizona one of the first states to broadly protect home-sharing.

The Law at Issue

In 2016, state lawmakers passed Senate Bill 1350. The law removed local prohibitions on vacation rentals and short-term home-sharing. Supporters argued the measure protected private property rights and gave homeowners flexibility to earn income from their homes. The statute was intended to apply statewide, limiting the ability of cities to prohibit short-term rentals outright.

Sedona’s Challenge

Sedona attempted to limit short-term rentals at the Oak Creek Mobilodge, a mobile-home park within city limits. City officials argued the community was not protected by the statute because mobile homes were not “single-family residences” under local interpretation.

City leaders said Sedona’s growing short-term rental market was straining housing availability for hospitality workers. Based on that concern, the city took enforcement action against the mobile-home park.

The Lawsuit

Goldwater Institute attorneys, representing Oak Creek Mobilodge, sued the city. They argued Sedona could not sidestep state law by excluding certain housing types from protection. The lawsuit said allowing such exclusions would let cities effectively ban home-sharing by targeting specific categories of housing.

A lower court initially agreed with Sedona’s position. That decision would have allowed cities to restrict short-term rentals in manufactured-home communities or other zoning categories.

Appeals Court Reversal

The Arizona Court of Appeals overturned the lower court’s ruling. The appellate judges held that the state law broadly preempts local bans and applies to all dwelling units, including mobile homes and manufactured housing.

The court said cities may regulate issues such as noise, parking, occupancy, public safety, and nuisance conditions. However, they cannot ban or materially restrict home-sharing itself.

Broader Impact

The ruling has implications beyond Sedona. Many Arizona cities have explored limits on short-term rentals as housing costs rise. The court’s decision draws a clear boundary between permissible regulation and outright prohibition.

For homeowners, the decision preserves the ability to rent out property on a temporary basis. Supporters say home-sharing can help families cover mortgages, manage rising costs, and handle unexpected financial pressures.

The decision reinforces state authority over home-sharing policy and limits the power of cities to create exceptions. It confirms that Arizona’s home-sharing law applies broadly, regardless of housing type.

The case marks a significant ruling in the ongoing debate over short-term rentals, local control, and property rights in Arizona