Idaho Supreme Court Rules that Cities Cannot Limit Vacation Rentals Based on Owner Occupancy

5/27/2025

The Idaho Supreme Court struck down a local ordinance that limited what kinds of short-term rentals can operate in residential zones of the city. Lava Hot Springs residents, with support from the Idaho Association of Realtors, sued the city after being denied a business license to operate a vacation rental in the residential zone, arguing the ordinance violated Idaho’s Short-term Rental and Vacation Rental Act. The law was passed in 2017, preempting any local governments from limiting short-term rentals beyond reasonable regulations for health and safety concerns. The 2006 zoning ordinance allowed owner-occupied short-term rentals in both commercial and residential zones – defining them as “bed and breakfast” short-term rentals, while restricting non-owner-occupied short-term “vacation rentals” to commercial zones only. The state high court overturned the lower court’s summary judgment in favor of the city, which was based on the ordinance not prohibiting short-term vacation rentals outright.

Idaho Reports (05/23/25) Logan Finney