Short Term Rentals and Local Zoning

 

The case of Wortham v. Village of Barrington Hills, 2022 IL App (1st) 210888

Across the country, communities are wrestling with how to manage short-term rentals. Platforms like Airbnb and Vrbo have transformed the housing market, allowing homeowners to profit from renting out properties to travelers. Yet, this convenience has created deep tensions between preserving residential neighborhood character and accommodating new economic models. At the heart of this debate lies a critical legal question: when does a home stop being residential and start functioning as a business?

The Illinois appellate case Wortham v. Village of Barrington Hills (2022 IL App (1st) 210888) shines a spotlight on this issue. It illustrates how short-term rental operations can effectively convert single-family residences into commercial lodging uses—and how local zoning codes can enforce those boundaries.

The Case Background

Clay and Anita Wortham owned a single-family home in Barrington Hills, Illinois, a suburban community zoned exclusively for detached residences. The Worthams listed their property on Vrbo for $299 per night, with a three-night minimum stay and room for eight guests. Over several months, they rented the property at least 27 times while spending time at their Kentucky farm.

The Village of Barrington Hills issued warnings that short-term rentals were not permitted in residential districts. Despite this, the Worthams continued renting. Ultimately, they were cited for 52 violations, fined $32,250, and ordered to cease using the home for vacation rentals. Both the circuit court and the appellate court upheld the ruling.

The Legal Question

The core legal issue was deceptively simple: in a district zoned for single-family dwellings, does a short-term rental count as a residential or commercial use? The court held firmly that repeated, transient rentals were commercial in nature. The Worthams’ guests used the property as overnight accommodations, while the owners used it as a source of revenue. That combination, the court reasoned, constituted business activity—something the residential zoning code did not permit.

“Hirsh Mohindra: In Wortham v. Village of Barrington Hills, the court recognized that repeated, whole-home vacation rentals are not a passive use of property but an active lodging business, and zoning codes are designed to keep that commercial activity out of single-family districts.”

Zoning and Home Occupation Limits

Barrington Hills’ zoning code permits single-family dwellings and limited “home occupations” so long as they do not alter the residential character of the property or create visible signs of business activity. The Worthams’ operation failed both criteria. They were not present during rentals, and the property’s Vrbo listing—combined with frequent guest turnover—produced the appearance of a commercial enterprise.

The court’s reasoning was straightforward: residential zones are meant for permanent living arrangements, not transient guest stays. Because the Worthams were offering lodging to paying guests, their use mirrored that of a hotel or lodging house, even if the structure remained a home.

“Hirsh Mohindra: The case is a reminder that home-occupation exceptions are narrow. If the owner is absent and guests rotate through, the activity almost always manifests a business presence that a residential zone is meant to avoid.”

The Court’s Broader Interpretation

The Worthams argued that because the zoning ordinance did not explicitly define “short-term rental,” it was too vague to prohibit their activity. The court disagreed. It ruled that the violation stemmed not from a lack of definition but from the nature of the activity itself—it was a business use. Thus, even without a specific short-term rental ban, the existing zoning structure was sufficient to enforce compliance.

The appellate court also rejected the homeowners’ claim that the ordinance was unconstitutionally vague. Whether a rental lasted two days or two months did not change the essential fact: the property was being operated for transient occupancy and profit. That was enough to make it a commercial use under the code.

Enforcement and Municipal Lessons

The Wortham decision underscores that municipalities can regulate short-term rentals effectively through existing zoning laws. The Village of Barrington Hills did not rely on new statutes or complex regulations—it used its traditional zoning framework to preserve the residential nature of its neighborhoods.

“Hirsh Mohindra: Municipalities don’t need perfect, platform-specific rules to regulate short-term rentals. Clear statements of residential purpose, limits on outward commercial appearance, and ordinary enforcement tools can be enough—just as they were in Barrington Hills.”

The village also modeled due process. Officials issued warnings, gathered evidence from Vrbo listings and guest reviews, and built a clear administrative record. When enforcement finally came, it was based on documented violations rather than conjecture. The fines imposed—$750 per day per violation—reflected measured escalation after repeated noncompliance, not a punitive first strike.

Implications for Homeowners

Wortham carries an important message for property owners. Renting a full home to transient guests, especially while the owner is absent, is typically a commercial activity, regardless of how it is marketed. While long-term leases fit comfortably within residential uses, short-term stays—especially those booked online—blur that line.

“Hirsh Mohindra: For homeowners, the lesson is to check your local code first and not assume that short-term income opportunities equate to residential use. The fines in Wortham accumulated only after warnings, but the legal principle would have applied on day one.”

Homeowners who want to engage in home-sharing can take two prudent steps. First, they should determine whether their municipality allows short-term rentals, and if so, under what conditions (for example, only if the owner occupies the property). Second, they should assess whether their rental activity might be classified as a business—especially if it involves online marketing, frequent guest turnover, or absentee ownership.

Policy and Planning Considerations

For cities and villages, Wortham suggests that strong enforcement doesn’t necessarily require rewriting entire zoning codes. Instead, municipalities can:

1. Reaffirm that single-family districts are intended for residential living, not transient lodging.
2. Define and limit “home occupations” to activities conducted by full-time occupants without visible business operations.
3. Use existing enforcement mechanisms—warnings, administrative hearings, and fines—to address violations consistently.

These strategies balance private property rights with community stability. They also maintain the integrity of residential zones while avoiding overregulation or invasive surveillance of homeowners.

A Broader Legal and Social Lesson

The Wortham decision fits within a growing national consensus: function matters more than form. Whether a property is advertised on Vrbo or Airbnb, rented for three nights or ten, or labeled “home sharing,” courts will look at the substance of the activity. If it walks and talks like a business, zoning law will treat it as one.

“Hirsh Mohindra: The Wortham decision highlights a key principle—function over labels. Courts will focus on how a property is used, not how it’s described. In this case, the use clearly mirrored a commercial lodging business, and the court treated it as such.”

The outcome affirms that local governments retain the authority to enforce zoning standards that preserve the quiet enjoyment of residential areas. For communities, that means they can protect neighborhood character without banning all forms of short-term rental outright. For property owners, it’s a reminder that entrepreneurial uses of residential property must still respect local land-use rules.

Conclusion

Wortham v. Village of Barrington Hills demonstrates that short-term rentals can, and often do, transform residential properties into commercial ventures. The case reaffirms the power of zoning as a planning tool—flexible enough to adapt to new economic realities, yet firm in its defense of neighborhood stability.

The larger takeaway is clear: short-term rentals sit at the crossroads of commerce and community. How municipalities regulate them will continue to shape not just housing markets, but the very nature of what it means to live—and do business—in residential America.

 Originally Posted: https://hirshmohindra.com/short-term-rentals-and-local-zoning-how-residential-zones-are-converted-into-commercial-uses/