Final Victory for Property Owners in the Tar Heel State!
There’s a bit more Southern hospitality in North Carolina thanks to IJ’s appellate victory striking down an unlawful ban on residential rental properties in Wilmington. In its April decision, an appeals court reaffirmed IJ’s 2020 trial court victory, declaring that Wilmington’s ordinance placing a hard cap on rental properties in the city was void and unenforceable. As a result of IJ’s victory, property owners throughout Wilmington can continue offering their properties for rent without the interference of the government, so long as they do not run afoul of a handful of regulations governing basic neighborly conduct. In other words, if renting one’s property does not impair neighbors from enjoying the general use of theirs, the government cannot intervene.
The court of appeals’ decision was the culmination of nearly two years of litigation. The case began in August 2020, soon after Wilmington enacted an ordinance requiring owners of rental properties to register with the city—a process that first required entry into a lottery system that sought to limit and geographically separate the rental properties in town. Those who won the lottery could offer their properties for rent, while those who lost the lottery were forbidden from doing so. For the many who had been offering their properties lawfully before the city enacted its ordinance, but who did not win the city’s lottery, the city ordered that they cease renting within a year. That is what happened to IJ’s clients in this case, Peg and David Schroeder, who had invested about $75,000 renovating a home they own so that they could rent it out.
The right to rent property to others is a cherished and historically important element of property rights. The city’s registration and lottery not only trampled on that right, but they did so in direct conflict with state law. In fact, the North Carolina General Assembly enacted a statute several years before with the clear goal of preventing municipalities like Wilmington from passing ordinances precisely like the one it passed.
That this statute existed was not unknown to the members of the Wilmington City Council. Nor was its intended purpose—stopping local governments from overregulating residential rental property—unclear to anyone else who took the time to look into the matter.
But lawmakers in Wilmington took a more cynical view, reading the statute as actually empowering cities to enact precisely the regulations that the law sought to forbid. And if you disagree, they seemed to taunt, “Sue us.”
And so we did. Indeed, IJ is uniquely positioned to fight these types of battles on behalf of clients who otherwise would have no choice but to surrender their rights. Along with committed clients like Peg and David, IJ stands on principle in the face of crafty bureaucrats and their armies of lawyers. And, time and again, we win.
Ari Bargil is an IJ attorney.
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