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Fourth Amendment Win

By M.D. Kittle 

Wisconsin Spotlight | June 30, 2020

MADISON  — Property rights recently posted a big win in Lake Geneva. 

The Lake Geneva City Council has approved an amendment to the city’s ordinance for home rentals. The amendment removes harmful provisions that violate the rights of homeowners

Council action followed a lawsuit from the Wisconsin Institute for Law & Liberty and the Wisconsin Realtors Association. 

State law gives homeowners the right to rent their home on a short-term basis for up to 180 days in a year. 

Lake Geneva’s home rental license included constitutionally suspect provisions, requiring homeowners to install a ‘Knox Box’ which gives city officials access to the home’s key, according to WILL, a Milwaukee-based public interest law firm. The provision opened  these rental homes to warrantless inspections from city officials, mandated property owners provide their guest registries and rental records on demand, and forced them to pay an exorbitant $2,000 fee — far and away the largest such fee in the state. 

With the litigation pending, the city council addressed the key challenges, modifying its short-term-rental ordinance as follows:

  • Made installation of a “Knox Box” and providing house keys to city officials optional
  • Added a warrant requirement to the home inspection provision and clarified that homeowners may not be penalized for declining to consent to a warrantless inspection
  • Required city officials to provide a written explanation for any request to inspect records and to give homeowners sufficient time to review and respond to the request
  • Lowered the fee from $2,000 to $750

“We are pleased the Lake Geneva City Council took these steps to secure the property rights of homeowners who choose to occasionally rent their home on a short-term basis. We stand ready to protect the rights of homeowners throughout the state,” WILL Senior Counsel Don Daugherty said in a statement. 

WILL and the Realtors sued on behalf of three Lake Geneva homeowners, issuing a 

a demand letter to the city last fall identifying harmful and illegal provisions in the  short-term-rental ordinance.  

WILL followed up with a complaint filed in Walworth County on December 10, alleging Fourth Amendment violations related to the inspection and Knox Box provisions. The law firm was preparing to file a separate action before the Tax Appeals Commission to challenge the $2,000 fee.

WILL said the modifications largely resolve the Fourth Amendment lawsuit. Attorneys are evaluating whether to challenge the new fee of $750, which is still one of the highest in the state.

“Both the U.S. Constitution and Wisconsin Statutes protect the rights of homeowners to rent their homes on a short-term basis, subject to reasonable local regulations. We applaud the changes made to the City of Lake Geneva’s short-term rental regulations, which will help better protect the property rights of homeowners in the City,” Tom Larson, WRA senior vice president of Legal and Public Affairs. 

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