In the City of the Village of Douglas, a short-term rental certificate does not survive the closing. The city's own registration packet says the sale or transfer of the property automatically voids any existing rental occupancy certificate, and the new owner has to apply again from the beginning. The seller's five-year booking history transfers to you as a story. The permission does not.
That single clause is the clearest version of something true across this whole stretch of shoreline, and it is the part the median price never shows you. Between Saugatuck, Douglas and South Haven, the scarce asset is not the cottage. It is the license attached to it, and each town has tied that license to a different trigger: a percentage in Saugatuck, the closing itself in Douglas, and a zoning approval still being rebuilt in South Haven. Two similar houses at similar prices, thirty minutes apart, can be two entirely different purchases.
Douglas: the trigger is the closing
Douglas permits short-term rental units in every zoning district where residential use is allowed, defining them as stays under 31 consecutive days. There is no district-by-district ceiling in the city's published materials. What there is instead is a certificate that lives with the owner rather than the address.
Any sale or transfer of the property automatically causes any existing rental occupancy certificate to be null and void and the new property owner must apply for a new rental occupancy certificate.
Registration runs through the city, the Saugatuck Township Fire District inspects the unit at least every 36 months before a certificate issues, and certification runs three years. The registration packet posted by the city lists a $375 fee payable to the Planning and Zoning Administrator, while the older 2025 version of the same packet shows $350 payable to the City Clerk. Confirm the current figure before you build it into a budget.
For a buyer, the practical consequence is a scheduling problem rather than a scarcity problem. The fire inspection, not the appraisal, is the item most likely to sit between your closing date and your first booked weekend. Sellers should understand the flip side: a Douglas listing cannot market a transferable license, because there isn't one. What it can market is a property that has already passed inspection and a clear paper trail showing what the inspector last asked for.
Saugatuck: the trigger is a date on a calendar
Across the river, the mechanism is entirely different, and it is tighter than most buyers expect.
In August 2024, the Saugatuck City Council voted 4-2 to cap short-term rental licenses at 20 percent of the dwelling units in each of the city's six R-1 residential districts. The city's own count at the time put short-term rentals at 32 percent of housing stock across those six districts combined, and at roughly 37 percent in the area residents call the Hill. The cap did not slow growth toward a ceiling. Several districts were already above it the day it took effect, which means no new license issues there until an existing one falls away. When the count drops below the cap, queued applicants are selected by lottery.
Existing licenses were grandfathered only until their own expiration dates. Older certificates issued under the previous zoning scheme cannot be renewed on the old terms once they lapse. City Manager Ryan Cummins described the goal as a balance between tourism and a year-round population. Council members Gregory Muncey and Russ Gardner voted no, arguing for an economic impact study first.
Here is where the date does the work. The city's April 2025 licensing amendment added late fees and set a five-day grace period for renewal applications, after which an application is deemed untimely and is not processed. In a district sitting above the cap, an untimely renewal is not a paperwork inconvenience. It is a license that returns to a pool no one can draw from.
The city is actively working on that pressure point. At a council workshop on August 19, 2026, members reviewed attorney-drafted language replacing the five-day grace period with a 60-day window running from 30 days before the deadline to 30 days after it, applied retroactively. The request came from a property owner. No final decision was made at the workshop, and as of this writing the amendment should be treated as pending rather than adopted. Earlier in the year, in February 2026, the council took up fixed renewal dates, the application window and a one-time amnesty for license holders while overseeing more than 250 licensed short-term rentals in the city.
The 2024 cap also drew a lawsuit. Saugatuck Neighbors, a nonprofit formed in response, filed suit in Allegan County's 48th Circuit Court through Varnum LLP, alleging the council did not follow the City Charter's conflict-of-interest procedure. Crain's Grand Rapids Business reported the filing, and the city has denied wrongdoing and maintained the cap was lawfully passed. I found no reported ruling since. Treat the case as unresolved and verify its status before assuming the cap is permanent or assuming it is fragile.
One more boundary question worth settling early: a Saugatuck mailing address does not mean the City of Saugatuck. Saugatuck Township and Laketown Township are separate jurisdictions with separate rules, and the line runs through neighborhoods that look continuous from the road.
South Haven: the trigger is an approval still in transition
South Haven is in the middle of swapping regimes, which makes verification there a question of timing as much as eligibility.
The city's short-term rental registration page explains that all units registered under Article X, the 2018 ordinance, expire on or before May 1, 2026. New and renewing operators move to Article V, Chapter 14, which requires zoning compliance review, registration before expiration and inspection every two years. Working through a backlog of zoning compliance applications, the council approved an amendment allowing staff to issue conditional licenses for the 2026 season beginning March 27, 2026.
License type shapes how you can actually use the house. A Class I license allows unlimited rental but no more than two rental stays in any seven-day period and requires proof of $1,000,000 liability insurance. A Class II license is capped at six rental terms or 28 rental days per calendar year, with dates reported to the STR Program Coordinator before guests arrive. The city's zoning approach treats short-term rentals as a commercial use permitted by special land use approval within a Short-Term Rental Overlay District, so location inside the city matters as much as the application itself.
South Haven Charter Township runs its own ordinance: annual registration, stays of three to 27 nights, only one rental term beginning per calendar week, a local agent if the owner lives more than 45 miles away, $1,000,000 liability insurance and a 12-person occupancy cap.
Michigan has no statewide short-term rental registration, which is why these three sets of rules can differ this much inside an hour's drive. The state does tax lodging stays of a month or less at 6 percent, and not every booking platform collects it on an owner's behalf.
| Market | What the license attaches to | What a sale does to it | The moving part right now |
|---|---|---|---|
| City of Saugatuck | A 20% ceiling per R-1 district, with lottery access when space opens | Requires confirmation with the city; districts above the cap have no room for a new issuance | Pending 60-day renewal grace period; unresolved charter lawsuit |
| City of the Village of Douglas | The owner, with a three-year certificate and inspection at least every 36 months | Voids the certificate automatically; the buyer reapplies | Registration fee posted at $350 in 2025 and $375 currently |
| City of South Haven | Zoning compliance plus a license class, inside an overlay district | Depends on class and zoning status; verify before underwriting | Article X registrations ending; conditional 2026-season licenses since March 27, 2026 |
What August's numbers actually buy you
Across Allegan, Ottawa and Muskegon counties in August 2026, the West Michigan Lakeshore Association of REALTORS reported a median sale price of $369,000, up 2 percent year over year, with 522 closed sales, down 7 percent, and total dollar volume of $234 million, down 4.4 percent. Active listings rose 12 percent to 1,170. Homes averaged 25 days on market. Freddie Mac's national average rate stood at 6.66 percent on August 27, 2026, against 6.56 percent a year earlier.
More listings, fewer closings, a median that barely moved. That combination is usually read as leverage on price. On this shoreline it is worth more as leverage on time. Inspection contingencies, extended due diligence periods and written verification from a zoning administrator all cost a seller patience rather than dollars, and patience is the thing a market with 12 percent more inventory has to spare.
The cap is what makes that leverage uneven. General inventory growth does nothing for license-eligible inventory in a district already above 20 percent, where the eligible pool only shrinks. Two cottages priced within a few thousand dollars of each other can sit on opposite sides of that line, and the one with a current license and a clean renewal date is carrying something the other cannot obtain at any price this season.
The order to verify things in
- Confirm the jurisdiction from the parcel, not the mailing address. City of Saugatuck, Saugatuck Township, Douglas, Laketown Township, City of South Haven and South Haven Charter Township are six different rulebooks.
- Confirm the zoning district and, in Saugatuck, whether that district currently sits above or below its cap.
- Confirm the license or certificate status in writing from the municipality, including the exact expiration date. In Saugatuck, that date is the number that matters most.
- Confirm the inspection cycle and when the last one happened. Douglas works on a 36-month fire inspection, South Haven's Article V on a two-year cycle.
- Confirm private restrictions. A condominium association or HOA can limit rental use regardless of what the city allows.
None of this is legal or tax advice, and ordinances here are being amended while buyers are under contract. The point of the sequence is that steps one and two tell you whether steps three through five are worth doing at all.
Questions that come up at the table
Can a seller assign their license to me? Do not plan on it. Douglas voids the certificate on transfer outright. Saugatuck's licensing ordinance has been amended to authorize certain types of transfers, and that language is specific enough that it deserves a direct answer from the city about your parcel rather than an assumption from either side of the deal.
If a district is over the cap, is the property worth less? It is worth differently. A home that cannot carry a license competes on lifestyle, location and long-term hold value, which is exactly how a large share of buyers on this shoreline evaluate a second home anyway. The mistake is paying a license-eligible price for a house that isn't.
What if the rules change after I close? Between the pending Saugatuck grace-period amendment, the unresolved lawsuit and South Haven's ongoing Article V transition, some of these rules will change. Underwrite the use you want most, personal or rental, and treat the other as upside.
That is the kind of question that rewards someone who reads council agendas in three towns at once. The team at Better Homes & Gardens Real Estate Connections works this shoreline alongside our Chicagoland and Northwest Indiana markets, and we will make the calls, request the written confirmations and tell you plainly when a cottage is a cottage and when it is something more. Let us guide you home.
