Navigating Conflicting Regulations Across Jurisdictions

Three types of regulatory conflicts affect real estate investors. Vertical Conflicts occur between different levels of government (federal vs. state, state vs. local). For example, several states have enacted preemption laws that prohibit local governments from enacting rent control, while the cities within those states have attempted to enact rent control ordinances—creating a conflict that must be resolved through courts. Horizontal Conflicts occur between different regulations at the same level. For example, a local STR ordinance may conflict with a local zoning ordinance regarding permitted residential uses. Temporal Conflicts occur when regulations change over time, and properties that were compliant under the old rule are non-compliant under the new rule (often addressed through "grandfathering" provisions). Each type requires a different resolution strategy.

Five principles guide conflict resolution. Supremacy: federal law preempts conflicting state law, and state law preempts conflicting local law (in most states). When a clear hierarchy exists, follow the higher authority. Most Restrictive Rule: when regulations do not directly conflict but have different standards, the most restrictive applicable rule governs. For example, if federal law requires 10 days notice but local law requires 30 days, the 30-day requirement applies. Specificity: a regulation specifically addressing an issue takes precedence over a general regulation that touches on it incidentally. Later in Time: when two regulations at the same level conflict, the more recently enacted regulation typically prevails. Legal Counsel: when the conflict is genuinely ambiguous, engage an attorney familiar with the specific regulatory area to provide a written opinion. The opinion itself becomes documentation of good-faith compliance efforts.

Common conflict scenarios include: State Preemption of Local Rent Control—several states (e.g., Texas, Florida, Indiana) prohibit local rent control. If a city within those states attempts to enact rent control, the state preemption controls, but investors should monitor legal challenges. Source-of-Income Discrimination—federal law does not prohibit SOI discrimination, but 15+ states and many cities do. An investor operating in multiple states must track which jurisdictions require acceptance of Housing Choice Vouchers. Eviction Moratoriums—during COVID-19, federal, state, and local moratoriums overlapped with different coverage, exemptions, and timelines. Investors had to identify the most restrictive applicable moratorium for each property. Building Codes—a state may adopt the International Building Code, but a city may amend it with additional local requirements. Both must be met. STR Regulations—a county may allow STRs while a city within the county prohibits them. The city prohibition governs properties within city limits.