When a South Haven listing mentions rental income, the buyer can't take over the seller's short-term rental license at closing. South Haven's 2025-2026 licensing FAQs say the license itself is not transferable but "the right to rent stays with the property." The new owner then has to apply for a zoning compliance determination, apply for a new license, pay the fees, and pass an inspection before the first guest arrives. So the rental history is real and it matters, but the buyer has to earn the permission to rent all over again. The home's location relative to the city's Short-Term Rental Overlay District then decides how much that right can grow once the new owner has it.
These rules come from South Haven's rewrite of its rental regulations. City Council voted unanimously for the revised ordinance on March 17, 2025. City materials list Ordinance 1097 as adopted March 27, 2025, with applications under the new Article V system opening August 1, 2025. The companion zoning amendment, Ordinance 1099, created the overlay district and took effect May 22, 2025. The older Article X registrations all expired on or before May 1, 2026. Any rental operating in South Haven today is under the new system, and that includes the one you may be about to make an offer on.
What changes hands at closing
The seller can hand over a record, meaning a past registration, a rental history, and an occupancy number printed on a license. The license names the licensee, the maximum permitted occupancy, the expiration date, the address, and any conditions the rental inspector added. Every one of those details belonged to the seller. When the deed changes hands, the city treats the buyer as a new applicant whose property happens to have a rental right attached.
That has practical consequences. Under Ordinance 1097, occupancy is capped at the lesser of two guests per bedroom plus two per finished story, reduced to the home's compliant sleeping capacity, or 12 guests. Previously registered rentals may keep a higher occupancy they were authorized for before. If a seller's numbers assume a guest count above 12, the buyer should ask the city directly whether that higher figure survives a new owner's application. The answer isn't in the materials we reviewed, and a pro forma can stand or fall on it.
The calendar a fall buyer is working against
As of today, September 30, 2026, the city's short-term rental page gives the review time for a completed zoning compliance application as "approximately 4 months." Here is how that plays out for a buyer closing this fall:
- Closing happens, and the seller's license stays with the seller.
- The new owner files a complete zoning compliance application with the fee. The city states that incomplete applications will not be processed.
- At the posted review time, an application filed in October would come back around February.
- Next come the license application, the license fee, and the inspection, all before the first booking.
- Every licensed rental needs an operator on file, and that operator must be the owner or a licensed real estate broker. An owner who hands the role to someone else has to appoint a broker, and the city's operator designation form must be signed by one.
In March 2026 the city tried to ease a backlog. WSJM reported that City Manager Kate Hosier said staff had finished about 20 percent of applications, and City Attorney Dave Eberle described conditional licenses that could run up to two years for qualifying rentals that were already registered. The city's page describes the program that resulted as conditional licenses "for the 2026 season, beginning March 27, 2026." We found nothing showing the program extends into 2027. A buyer planning on summer 2027 bookings should assume the standard process applies until the city says something different.
Which side of the overlay line the house sits on
The overlay district decides far more than the license does. New short-term rentals can be approved only inside the mapped overlay, and they need a special land use permit from the Planning Commission. Rentals that existed outside the overlay before the zoning change became nonconforming uses. Zoning Ordinance Section 2303 lets a nonconforming use continue "so long as it remains otherwise lawful," but says it "shall not be enlarged, extended, intensified, or expanded in such a way that increases the nonconforming nature of the use." The ordinance's own examples include added bedrooms, added seating, and "other facilities which would allow the scope or intensity of the nonconforming use to increase."
Section 2303 does carve out room for some work. Open, unenclosed decks, patios, and stairways don't count as expansion if they meet dimensional standards, keep the deck floor no higher than the first floor, keep every part of the deck at or below the guardrail or handrail height the building code requires, leave at least half the baluster area open, and are never enclosed later.
For a buyer outside the overlay, this changes what a renovation plan can accomplish. The house can keep renting the way it rents today. Improvements meant to make it a bigger or more appealing rental, such as an added bedroom, may be read as intensifying the use. The city's interactive overlay map is the place to confirm which side of the line a parcel falls on. Check it before you write an offer.
What a backyard pool showed the Zoning Board of Appeals
On August 24, 2026, South Haven's Zoning Board of Appeals heard a case that shows how strictly Section 2303 applies. The property at 1309 Monroe Blvd. is a 1.9-acre R-1B parcel registered as a Class II short-term rental since March 2024. It sits outside the overlay. The owners applied for a fiberglass pool and pool house. According to Wilcox Newspapers, Zoning Administrator Kelly Getman-Dissette explained that staff saw the pool as "the addition of another facility that would allow the scope or the intensity of the non-conforming use to increase," and the permit was denied. The pool in the application measured 14 by 33 feet.
The same Wilcox Newspapers report says owner Zeljko Bojic told the board the original plans showed a deck, a shed, a pool, and a pool house, and that "everything was approved at the time except the pool." The board upheld the interpretation and denied both the appeal and the variance. Several members said in their closing comments that they were uncomfortable with the outcome.
"I do feel like we all had our hands tied a bit. I wanted to say yes personally because I feel like somebody should be able to add a pool regardless of their short-term rental status." — Nick Kish, South Haven Zoning Board of Appeals
Board member Clark Gruber said he thought some recent changes were "too restrictive" and suggested talking with a City Council member. Amy Nichols said she planned to do the same. For a buyer, the takeaway is concrete. A pool is an ordinary backyard addition, and South Haven treated it as an expansion of the rental use. Any improvement you're counting on to raise a property's rental value needs a zoning answer before you rely on it.
The license class is its own decision
The Class I and Class II system replaced the old Business and Personal categories. The class a buyer applies for determines both the fees and how much the property can rent.
| Class I | Class II | |
|---|---|---|
| Rental limit | Unlimited terms, no more than 2 in any 7-day period | 28 days or 6 rental terms per year, whichever comes first |
| Application and inspection fee | $450 | $250 |
| Two-year license fee | $750 | $250 |
| Insurance | $1 million or more in liability coverage while offered for rent | Not listed in the provisions reviewed |
The fee figures come from the city's schedule revised November 17, 2025. That schedule also sets the initial zoning compliance fee at $450 and charges no initial zoning determination fee after special land use approval. The insurance requirement comes from Ordinance 1097. Both classes share the operator rule, so whoever is on file as operator, owner or broker, has to acknowledge city hotline notifications within 45 minutes. The Monroe Blvd. property was a Class II rental. Its owners were still prevented from adding a pool, which shows that a low-intensity class doesn't exempt a property from the nonconforming-use limits.
A rule that may change this fall
According to Citizen Portal, on September 3, 2026, the Planning Commission took up draft text that would make short-term rentals permitted by right inside the overlay and hand review to the zoning administrator instead of requiring a special land use permit. A meeting summary reports that the commission approved 18 short-term rental special land use reviews in the past year, at least four of them involving nonconforming structures, lots, or parking. A public hearing was set for the next meeting. That summary was generated from meeting video and comes with its own accuracy warning, and the change was only a proposal at that meeting. If it is adopted, opening a new rental inside the overlay would get simpler. Properties outside the overlay would still be limited by Section 2303.
Before your contingencies expire
- Use the city's map to confirm whether the parcel is inside the overlay.
- Ask City Building Services whether the seller's occupancy figure will apply to your application.
- Ask whether a pause in renting during the sale affects the property's nonconforming status. We could not confirm how the city handles that.
- Get a zoning answer on any planned addition before counting it in your numbers.
- Plan the purchase around a roughly four-month zoning review.
Quick answers
Does a buyer inherit the seller's license?
No. The right to rent stays with the property, but the buyer has to apply, pay, and pass inspection again.
Can a home that has never been rented become a short-term rental?
Only inside the overlay, and currently only with a Planning Commission special land use permit.
Is this legal advice?
No. Zoning eligibility is determined parcel by parcel, so take your specific questions to the City of South Haven's zoning staff.
If you're considering a South Haven home with rental history, Andrea Hook-Graham can help you line up the overlay check, the city's questions, and your contract deadlines before you commit to an offer. Let's Connect.
