This guide explains what Michigan law actually authorizes, how to read your governing documents to determine whether your rental restriction is enforceable, and what your board needs to do if the existing documents require updating. For guidance specific to your association’s documents and circumstances, contact the Michigan condominium and HOA attorneys at Szura & Delonis, PLC.

What Michigan Law Says About Rental Restrictions in Condominium Communities

The Statutory Foundation for Use Restrictions

Michigan condominium associations may regulate unit use through their recorded condominium documents, including the master deed and condominium bylaws, subject to the Condominium Act and the association’s amendment procedures. The practical complication is that not every rental restriction may have been properly adopted. Restrictions adopted without the required co-owner vote threshold are vulnerable to claims of procedural invalidity. And restrictions that were valid when adopted may face challenges if they were not consistently enforced.

Where Rental Restrictions Typically Appear: Bylaws, Master Deed, and Rules

Under Michigan condominium law, use restrictions, including rental restrictions, are most commonly found in the condominium bylaws, and bylaws are fully enforceable against all co-owners. The bylaws are recorded as part of the condominium documents at the county Register of Deeds and bind every co-owner as a condition of ownership. A properly adopted rental restriction in the bylaws carries the same legal weight as a provision in the master deed itself.

The distinction that does matter is between restrictions adopted through a co-owner vote — whether in the master deed or bylaws — and rules or regulations adopted by the board alone. Board-adopted rules occupy a different legal tier: they must be reasonable and consistent with the bylaws, but they did not go through the co-owner vote process and are more susceptible to challenge. A rental restriction adopted unilaterally by board resolution, without co-owner approval, is on weaker footing than one adopted through the amendment process the governing documents require. Before your board attempts to enforce a rental restriction of any kind, association counsel should confirm how the restriction was adopted and whether that process was consistent with the governing documents.

Rental Caps: How to Limit the Number of Rental Units in Your Association

How Rental Cap Percentages Work and Why They Matter

A rental cap provision restricts the total percentage of units that may be rented simultaneously. When a community reaches its cap, additional co-owners who wish to rent their units are prohibited from doing so until the rental percentage falls below the cap threshold. Many associations with rental caps maintain a waiting list: co-owners who wish to rent register with the association, and rental slots are allocated in order of registration when vacancies arise.

Rental caps also have significant practical implications beyond community character. FHA certification for condominium projects, which affects a co-owner’s ability to sell to buyers using FHA financing, requires that owner-occupancy rates meet specific thresholds. An association without a rental cap that drifts above the FHA investor-concentration threshold may find that its units become harder to sell and finance, reducing property values for all co-owners. Currently, as of 2026, no more than 50% of the units in the condominium project may be investor-owned or used as rentals. In other words, at least 50% of the units must be owner-occupied. (However, the required owner-occupancy level can be lowered to 35% [allowing up to 65% rentals/investor-owned units] if the project meets additional HUD criteria.)

The Waitlist Problem: What Happens When You Exceed the Cap

Boards that allow the rental percentage to exceed the cap, whether through informal tolerance or inadequate record-keeping, face two problems when they attempt to re-establish enforcement. First, co-owners who began renting in violation of the cap, or in reliance on the board’s non-enforcement, may argue that the board has waived the restriction or is estopped from enforcing it. Second, retroactively requiring existing renters to cease tenancies can raise its own fair housing and contractual complications. The cleanest approach is consistent enforcement from the moment a cap is adopted.

Short-Term Rentals and Airbnb: The Enforcement Crisis Michigan Boards Face

Why Pre-Platform Governing Documents Do Not Cover Short-Term Rentals

Governing documents drafted in the 1990s and early 2000s, which are a substantial number of the condominium documents for Metro Detroit communities, often did not contemplate platform-based short-term rentals. A bylaw that restricts units to “single-family residential use” may support a prohibition on short-term rentals in some interpretations, but that argument may not prevail when scrutinized by a court. A co-owner facing a fine for an Airbnb violation will argue that hosting guests in a private residence is residential use by definition. Whether that argument succeeds depends on how the specific restriction is worded and how Michigan courts have interpreted similar language.

Minimum Lease Term Provisions: Are They Enforceable?

The most defensible approach to short-term rental prohibition in Michigan condominiums is a minimum lease term provision. This is a requirement that all rentals must be for a minimum period, such as 60 or 90 days. This approach does not prohibit renting outright; it simply requires that rentals be of a duration inconsistent with nightly or weekly platform-based occupancy. Minimum lease term provisions are generally well-accepted in Michigan condominium practice as a reasonable use restriction, provided they are properly adopted. A provision requiring leases of at least 60 days, for example, effectively eliminates Airbnb and VRBO activity without requiring the association to police individual guest transactions.

Practice Note: An association that adopts a minimum lease term amendment should also require co-owners to provide copies of executed leases to the association and should authorize the board to request tenant identification information for security purposes. The amendment is more readily enforceable when it is paired with a lease registration requirement that gives the board visibility into rental activity before violations occur.

Enforcement Authority: Fines, Hearings, and the Due Process Requirement

MCL 559.206 and the Mandatory Hearing Before Enforcement

A Michigan condominium association that wishes to fine a co-owner for violating a rental restriction must comply with the procedural requirements of MCL 559.206, which provide for notice and a hearing before a fine is imposed. Issuing a fine without providing the co-owner with written notice of the violation and an opportunity to appear before the board (or a designated hearing panel) is a procedural error that can defeat the fine. For a detailed walkthrough of the notice and hearing process, see our article on Michigan condo fines, hearings, and due process.

The written violation notice must identify the specific provision the co-owner is alleged to have violated, state the proposed fine amount, and advise the co-owner of their right to request a hearing within the time period specified in the governing documents. Boards that want to create a deterrent against short-term rental violations should ensure that their fine schedule reflects meaningful amounts and that their hearing procedure is consistently followed.

The Selective Enforcement Trap

A board that enforces rental restrictions against some co-owners but ignores violations by others may face a selective enforcement defense in any subsequent litigation. Michigan courts have recognized selective enforcement as a basis for potentially voiding fines and injunctive orders. If your board is aware of multiple rental restriction violations, it must address them consistently. Enforcing against a co-owner who is renting to a long-term tenant while ignoring a neighbor’s active Airbnb listing is precisely the pattern that may erode the board’s position in litigation. The board’s enforcement decisions are entitled to deference under the Business Judgment Rule when they are applied consistently and in good faith.

Fair Housing Act Considerations Boards Should Not Ignore

Amending Your Governing Documents to Address Rental Restrictions

The Amendment Threshold Under MCL 559.190 and Your Bylaws

If your governing documents lack an adequate rental restriction, or if the existing restriction is ambiguously drafted or was not properly adopted, the solution is likely a governing document amendment. Amendment requirements for Michigan condominium documents are governed by the Condominium Act and the condominium’s own recorded documents. In many cases, amendments require approval by at least two-thirds of the co-owners eligible to vote, with mortgagee approval required only in specified circumstances. MCL 559.190 sets the statutory framework within which amendment procedures must operate. For a detailed treatment of the amendment process, see our guide to Michigan condominium bylaw amendments.

Grandfather Provisions and Existing Rental Arrangements

A rental restriction adopted by amendment raises a significant practical question: what happens to co-owners who were actively renting their units before the restriction was adopted? Michigan condominium practice, and basic fairness, generally supports including a “grandfather provision” that allows existing rental arrangements to continue until the current lease expires, while prohibiting new rental arrangements after the amendment’s effective date. Imposing an immediate restriction on an existing tenant’s occupancy may create legal risk and tends to generate the most opposition from co-owners during the amendment vote.

What the Amendment Must Say to Be Enforceable

A rental restriction amendment that will withstand challenge needs to be specific, unambiguous, and consistent with the rest of the governing documents. It should define “rental” with sufficient precision to capture the conduct the board intends to prohibit — including platform-based short-term arrangements. It should state the minimum lease term if one is required. We also counsel our clients that it should specify the enforcement mechanism, the fine schedule, and the hearing procedure. And it should be recorded at the County Register of Deeds to provide constructive notice to future purchasers.

Common Mistakes Michigan Boards Make Enforcing Rental Restrictions

Frequently Asked Questions About Michigan Condominium Rental Restrictions

Can a Michigan condominium association completely prohibit renting units?

Yes, provided the prohibition is adopted through the amendment procedure required by the governing documents — including the applicable co-owner vote threshold — and is recorded as part of the condominium documents. A total rental prohibition is a significant restriction on property rights and should be reviewed by association counsel before adoption to evaluate legal defensibility and Fair Housing implications.

Our governing documents say units must be used for “residential purposes only.” Does that ban Airbnb?

Not automatically. Michigan appellate decisions have often enforced residential-use, private-dwelling, and anti-commercial-use restrictions against short-term rentals, but outcomes still depend on the exact covenant language and the facts. A co-owner will argue that hosting guests in a private residence is residential use by definition. The stronger and more defensible approach is a specific minimum lease term provision, such as a 60-day minimum, that eliminates short-term rental activity without relying on ambiguous language. Boards relying on “residential use” language alone should consult association counsel before issuing fines.

Can a co-owner who was renting before we adopted a rental cap be grandfathered in?

Yes, and it is generally advisable to include a “grandfather provision” in any rental cap amendment. The provision should allow existing leases to run to their natural expiration and prohibit new rental arrangements after the amendment’s effective date. A grandfather provision reduces legal risk, generates less opposition during the co-owner vote, and is more equitable to co-owners who made financial decisions in reliance on the pre-existing rules.

What happens if the board has been inconsistently enforcing our rental restriction for years?

A long history of non-enforcement may create waiver and estoppel risks that must be assessed before the board resumes enforcement. The strongest approach is to issue a written notice to all co-owners announcing that the association will enforce the restriction going forward from a specific date, giving co-owners reasonable time to cure violations before fines begin. This resets the enforcement posture prospectively and reduces the waiver argument. Association counsel should be involved in designing this process.

Can the association fine a co-owner’s tenant for violating the rental restriction?

Typically, no. The association has no contractual relationship with tenants. Rental restriction enforcement runs against the co-owner, not the tenant. The co-owner is responsible for ensuring that any occupant of their unit complies with the governing documents. The board should direct all enforcement notices and fines to the co-owner of record and allow the co-owner to address the issue with their tenant through the terms of the lease.

Disclaimer: This article is intended for general educational purposes only and does not constitute legal advice. The information provided does not create an attorney-client relationship. Michigan condominium board members, property managers, and associations with specific legal questions should consult qualified Michigan condominium and HOA counsel regarding their particular circumstances.

Protect Your Community — Contact Szura & Delonis, PLC

Michigan condominium rental restrictions are only as strong as the documents behind them and the process used to enforce them. If your board is dealing with short-term rental violations, considering a rental cap amendment, or needs a governing document review to determine whether your existing restrictions were properly adopted and are enforceable, the Michigan condominium and HOA attorneys at Szura & Delonis, PLC are ready to help. We represent condominium associations and HOAs throughout Oakland County, Wayne County, and Macomb County.

Call us at (248) 716-3600 or contact us online to schedule a consultation.

About the Author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.