The Town of Highlands has settled a legal dispute concerning its regulation of short-term rentals and the use of amortization, according to a consent judgment from the North Carolina Superior Court signed on Dec. 18, 2025. The agreement concludes the lawsuit known as Huff v. Highlands, ending several years of legal proceedings over local zoning rules.
Background: Short-term rentals spark
community debate
The rise of online platforms such as Airbnb and Vrbo led to an increase in short-term rental activity in Highlands. While some residents and property owners viewed these rentals as an economic boon, providing income for homeowners and supporting local businesses, others expressed concern about their impact on neighborhood character, long-term housing availability and community stability. Complaints included increased traffic, noise and the transformation of traditionally residential neighborhoods into transient lodging areas.
Responding to these concerns, the Highlands Board of Commissioners began exploring regulatory measures as early as 2021. Public meetings and hearings revealed a divided community, with some advocating for stricter controls and others defending property rights and the benefits of tourism. The issue became more pronounced in September 2022 when the Board adopted a Unified Development Ordinance (UDO) that restricted new short-term rentals in R1 and R2 residential zones. Existing rentals were allowed to continue operating, but new permits were prohibited in these areas. An additional requirement of the UDO mandated that existing rentals must continue operation and cannot go 365 consecutive days without operating as a short-term rental.
Amortization and additional legal disputes
In Sept. 2024, the Board adopted amortization provisions designed to phase out nonconforming short-term rentals in restricted zones by September 2027. Amortization—a legal mechanism allowing property owners a set period to wind down prohibited uses—became a focal point of the controversy.
Significant legislative developments followed when the North Carolina Senate passed Senate Bill 382, which limited local governments’ ability to down-zone properties and significantly affected the legal basis for amortization measures. The new law took effect on Dec. 11, 2024, and applied to local government ordinances adopted on or after that date, as well as to local government ordinances that enacted down-zoning of property within the 180 days leading up to the effective date of this section—that is, any zoning amendments adopted after June 14, 2024. The Town’s adoption of the amortization provision to the UDO fell within this timeframe.
After discussions with legal counsel and considering the recent state legislation, the Highlands Board of Commissioners voted unanimously to pursue a settlement. Town officials stated that the agreement avoids further litigation and the potential for increased legal costs for residents.
Settlement Terms
As part of the settlement, the town’s amortization ordinance will be declared null and void and removed from local zoning regulations. The town will pay $70,000 toward the plaintiffs’ legal expenses. If a similar ordinance is adopted in the future, the town must deposit $150,000 into a legal defense fund for the plaintiffs, who will retain the right to challenge any future or existing short-term rental regulations.
The settlement does not modify the primary short-term rental ordinance enacted in September 2022, which continues to prohibit new short-term rentals in R1 and R2 zones. Town officials have indicated these regulations will remain in effect and be enforced.
Jennifer Huff, the lead plaintiff, stated about the settlement: “We are pleased that the town commissioners came to a unanimous vote on the settlement of Huff v. Highlands, and on amortization. From day one, we have maintained that the law is on our side. In closing this chapter, we have successfully achieved our mission of protecting established property rights in Highlands. This settlement is a rewarding end to what’s been an arduous process.”
The consent judgment was signed by both parties and the Superior Court Judge, serving as the final resolution of all claims in the case. The Highlands Board of Commissioners considers all issues raised in Huff v. Highlands settled.
The settlement brings an end to years of litigation, clarifies the status of short-term rental regulations in Highlands, and closes the chapter on the town’s amortization ordinance.
- Josh Bryson
editor@highlandsnews.com