Arizona Court of Appeals Rules in Favor of Mobile Home Park Short-Term Rentals

Sedona, AZ — January 9, 2026

In a significant legal decision with statewide implications for property rights and short-term rental regulations, the Arizona Court of Appeals, Division One, has ruled that the City of Sedona cannot prohibit short-term rentals in mobile home parks under state law. The unanimous opinion, authored by Presiding Judge Jennifer M. Perkins, reverses a lower court dismissal and sends the case back to the trial court for further proceedings. (Justia)

Case Background

The dispute revolves aroundOak Creek Hospitality, LLC, which in 2024 purchased the 59-spaceOak Creek Mobilodgemobile home park in Sedona with the intent to operate the individual mobile homes as short-term rentals. When the company sought a short-term rental license from the City, Sedona officials responded thatmobile homes in a mobile home park were categorically excluded from short-term rental use under local rules, effectively blocking Oak Creek’s plans. (Justia)

Oak Creek then filed a lawsuit in Yavapai County Superior Court seeking declaratory and injunctive relief, arguing that the City’s prohibition was unlawful because it conflicted with Arizona’s Short-Term Rental Statute (Arizona Revised Statutes Section 9-500.39), which was enacted to limit local regulation of vacation and short-term rentals. (Justia)

Court of Appeals Decision

The appellate court agreed with Oak Creek. The panel concluded that the definition of“vacation rental” or “short-term rental”under state lawincludes individual dwelling units— including mobile homes — and is not confined to specific housing types traditionally thought of as single-family houses. Based on this interpretation, the court held that Sedona’s policy of categorically barring mobile home park units from short-term rental useconflicted with and was preempted by state law. (Justia)

“This statute unambiguously prohibits cities and towns from banning short-term rentals,” the opinion explained, and the question of whether an individual structure is a mobile home does not exempt it from the statute’s protections. (Justia) As a result, the Court of Appeals reversed the lower court’s dismissal and remanded the case for further proceedings.

The appellate court also directed the superior court to enter partial summary judgment declaring that Sedona may not prohibit mobile homes in mobile home parks from being used as short-term rentals, though it acknowledged the city may still require proper licensing under its code. (Justia)

Attorney Fees Awarded

In addition to vindicating Oak Creek’s legal position, the court held that the company is entitled toreasonable attorney fees on appeal, finding that it successfully enforced a right of public importance consistent with the private attorney general doctrine. (Justia)

Broader Implications

The ruling strengthens the reach of Arizona’s statewide short-term rental law and signals limits on how far municipalities may go in tailoring local bans that conflict with state definitions. It may have ripple effects for cities across Arizona that have attempted to restrict short-term rentals in certain property types or zones. (KJZZ)

What Happens Next

On remand, the superior court will resume proceedings consistent with the appellate opinion. Oak Creek must still apply for and obtain the necessary short-term rental license under Sedona’s regulatory framework, but the court’s ruling bars the city from denying that applicationsolely because the units are mobile homes located in a mobile home park. (Justia)

This summary is based on the published Arizona Court of Appeals opinion and related reporting. (Justia)