In recent years, online platforms like Airbnb and HomeAway have made it easier for property owners to enter into the short-term rental market, which allows property owners to generate supplemental income and defray the cost of maintaining their real estate. The emergence of this “industry,” however, has faced resistance from neighboring property owners and local governments over concerns that transient occupancy negatively impacts property values, as well as general concerns for the health, safety, and welfare of the community.

In response to these concerns, the City of Miami Beach (in the exercise of its police power) enacted two ordinances that, for all practical purposes, banned short-term rentals on Miami Beach. Both ordinances prohibited the rental of properties for terms of six (6) months or less, with limited exceptions not pertinent to the issues at hand. As a penalty, if a property owner rented for a period of less than six (6) months and one (1) day in violation of the ordinances, then that property owner would be subject to escalating fines of $20,000.00 for the first offense, $40,000.00 for the second, $60,000.00 for the third, $80,000.00 for the fourth, and $100,000.00 for all offenses thereafter.

In a recent case, NATALIE NICHOLS, v. CITY OF MIAMI BEACH, FLORIDA, et al., the 11th Judicial Circuit Court in and for Miami-Dade County found for the Plaintiff, Natalie Nichols, and held that the two ordinances passed and adopted by the City of Miami Beach (the “City”) that imposed the escalating fines for violations of the City’s ban on short-term rentals of residential properties were illegal and unenforceable.

The Plaintiff attacked the City’s ordinances on the following three fronts: (1) the ordinances are unconstitutional under the equal protection provisions of Article I, Section 2 of the Florida Constitution because they prohibit the short-term rental of Plaintiff’s properties, while allowing the short-term rental of “similarly situated properties”; (2) the ordinances violate Article I, Section 17 of the Florida Constitution, both facially and as applied, because they impose “grossly excessive punishment meant to deter people from peacefully using their property for home-sharing”; and (3) the ordinances conflict with Florida Statute Section 163.09(2)(d), which limits the fines municipalities may levy for code violations to “$1,000.00 per day for the first violation and $5,000.00 per day for repeat violations.”

Because the third claim raised a preemption claim on a purely legal and potentially dispositive issue, the Court directed the parties to file cross-motions for summary judgment directed to that claim only.

The court found that the ordinances did, in fact, conflict with Section 162.09(2)(d), F.S., because the statute limits fines to only $1,000.00 per day, and, pursuant to the ordinances, a property owner could be fined up to $20,000.00 per day. The Court stated that it was “patently obvious the fines a violator is exposed to are markedly different under the statute and ordinances, and the fact that in some hypothetical scenario the statutory fine could amount to more than the fine specified in the ordinance is of no consequence.”

The court also rejected the City’s argument that Plaintiff lacked standing to seek declaratory relief because she had not violated the ordinances or been penalized and found instead that there was no requirement that she must first violate the ordinances before she can challenge their legality.

Lastly, the court considered whether the City was permitted to impose fines greater than those authorized by Chapter 162 of the Florida Statutes. The court found that the legislature, in the exercise of its police power, clearly and unambiguously imposed caps on the amount local governments may fine citizens for code violations in Chapter 162.  Accordingly, the City must abide by the limit set forth in Chapter 162 as its ordinances were found to be illegal, resulting in a victory for the property owner and short-term rental companies.