For two and a half years, Folly Beach residents believed they had settled the short-term rental question at the ballot box. In February 2023, voters narrowly approved a referendum capping vacation rental business licenses at 800 — a margin of just 78 votes [Live 5 News, 2024]. What has followed since is a slow-motion lesson in how fragile a “settled” local ordinance really is once it meets a courtroom. For Horry County residents watching North Myrtle Beach, Myrtle Beach, and Horry County itself wrestle with their own short-term rental rules, Folly Beach’s ongoing legal saga is worth close attention — not because the outcome is unique to Charleston County, but because the pattern is not.
Round One: A Zoning Challenge That Failed
The first serious legal test came from Folly East Indian Co., a development company owned by Folly Beach builder Michael Riffert and Richard Brendel, who had built rental properties on the island before the cap took effect. Their lawsuit leaned on I’On LLC v. Town of Mount Pleasant, a South Carolina Supreme Court precedent holding that zoning decisions cannot legally be enacted through a citizen referendum [Folly Current, 2023]. If the STR cap was functionally a zoning rule, the argument went, the city had used the wrong process to adopt it — and the outcome would strip Folly Beach voters of a policy they had directly chosen.
The city’s defense turned on a narrower distinction: a license cap is a business regulation, not a rezoning. It restricts who may hold a permit to operate a short-term rental, not where a property may be used as one. A circuit court agreed, and in February 2026, the South Carolina Court of Appeals affirmed, ruling that the ordinance “only amended City’s business regulations” and did not touch the zoning code [Post and Courier, 2026]. Mayor Chris Bizzell called it a validation of the city’s approach [WCIV, 2026]. Notably, the appellate opinion was unpublished — meaning it carries no binding precedential weight for future cases, a detail that matters more than it might sound.
Round Two: The Same Ordinance, a Different Legal Theory
That “win” lasted six months. A separate lawsuit — filed in 2024 by Park Lane Partners LLC and property owner Elizabeth Spratt Cooper — challenged the same cap on entirely different grounds: not zoning, but taxation and the limits of referendum authority itself. On August 14, 2026, Ninth Judicial Circuit Judge Thomas J. Rode ruled that the power to regulate and tax rests with city council, not with voters directly, and struck down both the 800-license cap and the revenue-based registration fee that funded it, calling the fee “an improper tax disguised as a fee” [Post and Courier, 2026]. Folly Beach has said it intends to appeal and is weighing a moratorium on new licenses while a separate STR study continues [ABC News 4, 2026].
The Lesson Hiding in Plain Sight
This is the throughline Horry County officials and residents should not miss: Folly Beach did not lose because its ordinance was poorly written or because the city ignored a court order. It lost because a second plaintiff, with a differentlegal theory, found a vulnerability the first case never tested. An ordinance surviving one constitutional challenge is not the same as an ordinance being constitutional — it only means that particular argument, against that particular plaintiff, on that particular day, did not succeed. Nothing prevents another resident, investor, or attorney from finding a new angle. That is not a flaw in the system; it is how the system works, and it is precisely why local governments treat legally untested ordinances as provisional, not permanent.
That reality applies directly to North Myrtle Beach’s own patchwork of short-term rental rules, including the unresolved question of how the city verifies covenant compliance under S.C. Code § 6-29-1145. An ordinance that has never been challenged in court has not been validated by one, either — it has simply not yet met a plaintiff motivated enough to test it.
What This Means Statewide
Folly Beach is not alone in relying on referendum-based or fee-funded STR regulation, and other South Carolina coastal municipalities are watching this case for a reason: if the ruling survives appeal — or if Folly Beach takes it to the South Carolina Supreme Court, as plaintiffs in the earlier case suggested they might [WCIV, 2026] — it could reshape how any SC city may lawfully cap, fee, or fund short-term rental enforcement statewide, regardless of how popular the underlying policy is with voters.
Conclusion
Folly Beach’s cap may yet survive on appeal. But the deeper story isn’t about 800 licenses on one barrier island — it’s about how quickly a locally popular, voter-approved ordinance can be unwound once it’s tested from an angle nobody defended against the first time. For Horry County communities still writing their own STR rules, that’s not a Charleston County footnote. It’s a preview.
Further Reading
- Judge rules Folly Beach’s short-term rental cap ordinance, permit fees violate SC law — Post and Courier
- SC Appeals Court rules Folly Beach’s short-term rental cap is not a zoning change — Post and Courier
- Folly Beach keeps 800 short-term rental permit cap after court upholds policy — WCIV/ABC News 4
- City leaders to vote on appeal of ruling striking down short-term rental rules — WCIV/ABC News 4
- Folly Beach council to discuss appeal, short-term rental moratorium after court ruling — WCBD/Count On 2
- ‘The residents have spoken’: Folly short-term rental lawsuit progresses — WCSC Live 5 News
- Lawsuit Challenges Legitimacy of Feb. 7 Vote — Folly Current
