What the Recent Court Ruling Means for New Orleans Short-Term Rental Owners

In a significant development for short-term rental owners in New Orleans, the United States District Court for the Eastern District of Louisiana has granted a temporary restraining order against the enforcement of new short-term rental (STR) ordinances, specifically Ordinances 29381 M.C.S. and 29382 M.C.S. Here's what this ruling means for current and prospective STR owners in the area.

The Court's Decision

The Court temporarily restrained the City of New Orleans from enforcing the new STR ordinances pending a decision on their constitutionality. This restraining order does not affect the enforcement of other state or local laws, such as criminal misconduct or nuisance laws.

What This Means for Current STR Owners

If you're a current STR owner, you can breathe a little easier — for now. The temporary restraining order means that the City won't be enforcing the new STR regulations immediately. That said, it's essential to remember that this is a temporary order pending a more final decision from the Court.  And the City may enforce the old laws, and other laws.

Two other possibilities are notable for the the next few weeks while this ruling will have effect: (1) it's possible that the City will enforce the old ordinances as they were doing before July 1, 2023, and (2) it's possible that large parts of the new ordinances survive the ruling that coming on the summary judgment motions.  That could mean that certain provisions in the new ordinances, like density limitations on STRs New Orleans neighborhoods, would be allowed to continue (including the application, lottery, and exception processes). But other provisions of the new ordinances that are less likely to pass constitutional muster (like the restriction on ownership to only natural persons, not LLCs) may get struck down.

For those current owners who had applied for an NSTR permit, but lost the lottery, this could mean good news.  Before this ruling came out, it was possible that a new person on a particular square could apply for a NSTR permit during the quarterly open season for applications that was due to start tomorrow, Sept. 1, 2023.  Now, however, no new NSTR applications will be accepted. So those NSTR applicants who where considering seeking an exception to the density limitations can now know that they will not face new competition on their block, at least in the immediate future. 

What About Those Looking to Apply for New Permits?

If you were hesitant about applying for a new STR permit under the new regulations, this ruling may serve as a respite but is not an all-clear signal. The Court will have a hearing in September to make a more definitive ruling on the ordinances. Until that time, the uncertainty surrounding the new regulations remains, and you should proceed cautiously.

It is clear that, at least for right now, the City of New Orleans cannot process new NSTR applications starting on Sept. 1, 2023, as had been their plan. 

Financial Implications

For those concerned about financial penalties for operating under the shadow of the new regulations, this temporary order lifts that immediate threat. However, other laws still apply, and you should continue to monitor the situation closely, as the Court's final decision could retroactively validate any penalties or restrictions set forth in the ordinances.

Legal Ramifications

This temporary restraining order is a significant initial victory for those contesting the new ordinances' legality. However, it's crucial to bear in mind that this is not a final judgment. The Court has set a hearing for September to decide on the pending cross motions for summary judgment and a related motion for injunctive relief.

In conclusion, while this temporary restraining order brings temporary relief, it's not a permanent solution. All eyes are now on the Court's hearing scheduled for September, which could bring long-lasting implications for short-term rental operations in New Orleans.

For more information or legal advice tailored to your situation, please contact us.