A condo company lawsuit has been filed against Myrtle Beach, claiming the city’s rental restrictions caused millions in financial losses. The company argues that the regulations unfairly blocked their conversion of hotel rooms into long-term rental units.
Condo Company Lawsuit Alleges Millions in Damages
MBSC Property South LLC claims the city’s moratorium and rental ban resulted in over $10 million in damages. The company also estimates a loss of $6 million in projected profits due to these restrictions.
In 2022, MBSC purchased 169 hotel rooms at Sandcastle Oceanfront Resort South Beach for $16.9 million. Court records suggest that, based on rental projections, the property’s value could exceed $23.3 million. However, the city’s restrictions have allegedly prevented them from completing the conversion.
Dispute Over Zoning and Business Licensing
MBSC insists they had the correct zoning for long-term rentals before the moratorium. However, the company claims the city refused to issue a business license, blocking their rental plans. The lawsuit accuses the city of violating state zoning laws and infringing on their vested and civil rights.
The company planned to lease the units through a partnership with the Myrtle Beach Housing Authority. Their application for a voucher program was denied due to the city’s moratorium, according to court documents.
City Implements Rental Conversion Ban
In May 2024, the city temporarily halted applications to convert short-term rentals into long-term housing. The ban applied to properties east of Kings Highway and expired in January.
MBSC argues that the moratorium prevented them from meeting zoning requirements. The city later passed a December ordinance restricting long-term rental business licenses in specific areas, making the company’s plans impossible.
City officials argue that unchecked rental conversions would have cost millions in tax revenue. A study commissioned by the city suggested that job losses and increased public safety costs would result from large-scale rental conversions.
The ordinance bans rental conversions for properties used as short-term rentals but excludes single-family homes and duplexes. The city claims the restrictions do not affect those with existing long-term rental licenses.
Legal Claims Against the City
MBSC’s lawsuit accuses the city of violating state land use laws. The company argues the zoning changes contradict the city’s comprehensive plan and were motivated by financial concerns rather than legal planning guidelines.
The complaint also claims the ordinance unfairly treats property owners based on location and historical rental use. MBSC further argues that the city has failed to distinguish long-term rentals from other permanent residential properties, violating state law.
Additionally, MBSC accuses the city of violating the Fair Housing Act. The company claims the rental ban disproportionately impacts Black residents, senior citizens, veterans, and families with children, restricting affordable housing near the oceanfront.
MBSC alleges more than $10 million in damages, citing interest payments, legal fees, and other costs. The lawsuit seeks financial compensation and challenges the city’s right to enforce the rental restrictions.
