The Pennsylvania Supreme Court recently examined the meaning of the terms “family” and “single housekeeping unit” in Slice of Life v. Hamilton Township Hearing Board, (hereinafter Slice of Life) decided April 26, 2019 at J-97-2018 (No. 7 MAP 2018). It is not hyperbole to suggest, even with some unanswered questions, that this opinion has (dependent on an appropriately drafted ordinance) outlawed vacation rentals in homes in single-family residential districts. Thus, this decision is of vital importance, considering the proliferation of short-term rental offerings, with marketing streamlined by websites as Airbnb and VRBO.

Significantly, our highest court reversed the Commonwealth Court holding that ambiguity existed in an ordinance that was drafted with the intent of barring transient short-term rentals in an area zoned as residential. The court defined its task as determining whether a zoning ordinance that defines “family” as requiring a “single housekeeping unit” permits purely transient use of a property located in a residential zoning district. The court clearly recognized the larger context from which this appeal germinated—the effects on residential communities of the exploding on-line rentals of single-family homes in Pennsylvania to transient vacationers.

Preliminarily, Slice of Life's unsuccessful attempt to have the appeal dismissed as moot, on the basis of the sale of the subject property, must be noted. The attempt to evade judicial review by selling the subject property following a precedential decision in favor of the property owner was characterized as manipulation. The court understood that the short-term rental of properties in residential neighborhoods is capable of repetition by Slice of Life and others.

Slice of Life is a New York Limited Liability Company whose sole member is Val Kleyman. Kleyman testified that the subject property was never owner-occupied and is used exclusively for short-term vacation rental purposes. It was advertised as able to sleep as many as 17 people in six bedrooms and he estimated bookings of 25 weekend rentals annually. There were no background checks on anyone except the person who signed the lease. The property would be leased from two days up to one week. Notably, Kleyman admitted the people who rented the property fit the dictionary term of transient while at the same time denying that he was operating a hotel or transient boarding house. One neighbor testified to the type of conduct reminiscent of nuisance bars and bawdy houses: excessive noise, partying into the wee hours of the morning, and lewd conduct, for instance.

The relevant terms at the heart of the litigation are “family” and “single housekeeping unit.” The Hamilton Township ordinance at issue first defines dwelling as a building or structure to be used a “living quarters for one or more families” specifically excluding “hotel, motel, rooming houses or other tourist home.” “Family” is defined as one or more persons occupying a dwelling unit, related by blood, marriage or adoption, living together as a single housekeeping unit and using cooking facilities and certain rooms in common. Single housekeeping unit, a term of art used widely used in zoning ordinances was not defined, nor were rooming house and tourist home. See 1985 Hamilton Township Zoning Ordinance Section 204.1 (defining a one-family dwelling).

Per an enforcement notice, the zoning board found that the property was “part of a transient lodging business enterprise.” On argument, the trial court affirmed the board's decision. The trial court, like the zoning board, relied on Albert v. Zoning Hearing Board of North Abington Township, 854 A.2d 401 (Pa 2004), and concluded that “family” as used in zoning ordinances, requires a level of stability and permanence, criteria lacking in Slice of Life. The Commonwealth Court reversed however, on the grounds that the ordinance is ambiguous in not defining single household unit and that all uses not specifically excluded are presumptively legal uses. The Commonwealth Court further justified its analysis, by adhering to the doctrine that courts must strictly construe ambiguous zoning ordinances to allow for the broadest use of the land.

The Commonwealth Court relied on its recent decisions of Shvekh v. Zoning Hearing Board of Stroud Township, 154 A.3d 408 (Pa. Commw. 2017) and Marchenko v. Zoning Hearing Board of Pocono Township, 147 A.3d 947 (Pa. Commw. 2016), in which it held that short-term rentals in residential neighborhoods are not prohibited because they were not specifically prohibited by the respective ordinances. The court reasoned that even though the facts of these cases may be distinguishable, the same principles of law should apply. The evidence in Marchenko showed that Tatiana Marchenko rented her Poconos home 71 days per year. This was held as not a violation because the ordinance failed to bar short-term rentals; there was no discussion of meaning of single housekeeping unit or family. In Shvekh, a couple in the midst of a divorce engaged in a number of short-term rentals for which they were eventually cited. Both the board and the lower court concluded that the use was the functional equivalent of a hotel; the Commonwealth Court reversed and found Marchenko controlling.

In the present matter, the Supreme Court reversed the Commonwealth Court, recognizing the creation of residential zoning districts as perfectly valid exercises of municipal police power. Critically, our highest court noted that many early zoning ordinances did not define the word “family” leaving it for courts to do so. Subsequently, the phrase “single housekeeping unit” was used to define a family. In short order, these terms became the focus of litigation. The court cited Justice John Paul Steven's concurrence in Moore v. City of East Cleveland, Ohio, 431 U.S. 494, 515-19, (1977) which required that single housekeeping units remain nontransient.

The aforementioned Albert v. Zoning Hearing Board of N. Abington Township, and In re Appeal of Miller, 515 A.2d 904 (Pa. 1986) are pivotal in understanding the instant case. Miller adopted the reasoning of sister jurisdictions—whether or not the residents of a home were related to each other was not dispositive of whether they were a single housekeeping unit—which qualified them as a family. Miller required a functional analysis to determine whether the use was that of a family. Even though the use in Miller was that of a home for people with disabilities, the key factor was the nontransience of the residents—the residents usually lived there for substantial periods of time. The functional analysis was employed—the key to the court's holding was that there was no violation.

In 2004, the Albert Court applied the functional analysis standard to determine that the operation of a halfway house for recovering substance abusers, in a residential district, was not a family. The ordinance in question used the word family but did not define it. The individuals in a single household must not only function as a family but also the group of people must be ”sufficiently stable and permanent and not be characterized as purely transient.” The Albert court determined that transience of the residents was outside the definition of family; the residents only stayed at the property from two to six months. Such transience was seen as incompatible with the family/single household unit requirement.

Despite the precedent articulated in Miller and Albert, the Commonwealth panel found Albert inapplicable, finding its precedential value only applied to cases where family was undefined in the ordinance. The Commonwealth Court considered the signer of the lease as family and the remaining occupants as his guests.

The Supreme Court found that the Commonwealth Court improperly narrowed Miller to eliminate the functional analysis standard and “… ignored entirely our decision in Miller and distinguished our decision in Albert without any discussion or analysis. Instead it relied on its own factually inapposite and legally inaccurate decisions in Marchenko and Shvek.” According to the court, the requirement that a use is legal unless specifically prohibited is a rule that is impossible to for drafters of zoning ordinances to execute and contrary to precedent in Miller and Albert as well as Silver v. Zoning Board of Adjustment 112 A.2d 84 (Pa 1955).

It appears that not only companies like Slice of Life but also homeowners who periodically rent their homes could be successfully cited for running afoul of the degree of permanence standard. Does this apply to a home owner who rents out his home a few times a year? Are academic year rentals to college students subject to this standard? Regardless of the answer to these hypotheticals, investors and entrepreneurs intrigued by the notion of short-term rentals would be wise to give serious heed to the Slice of Life decision and its supporting rationale.

James M. Lammendola is an associate professor and deputy chair of the Legal Studies Department at Temple University's Fox School of Business. He was in private practice for 20 years. He may be reached at [email protected] or 215-204-4124.

Harper J. Dimmerman is a published novelist and adjunct professor at Temple University's Fox School of Business. He represents clients in various Philadelphia litigation and real estate law matters and may be reached at [email protected] or 215-545-0600.