Certificates of Rental Occupancy Can Establish a Lawful Preexisting STR Use When the Property Does Not Meet the Ordinance Definition of an ADU

1. Introduction

In Donald McGowan & a. v. Town of Hampton (N.H. Apr. 24, 2026), the New Hampshire Supreme Court affirmed a superior court order reversing the Town of Hampton Zoning Board of Adjustment (ZBA). The dispute arose after Hampton adopted a 2023 ordinance specifically regulating short-term rentals (STRs) by permit/special-exception requirements. The plaintiffs, Donald and Patricia McGowan, had rented their Hampton property as an STR since 2019 and had received a Certificate of Rental Occupancy (CRO) in 2021. In 2023, the Town revoked that CRO and pointed the plaintiffs to the new special-exception process.

The central issues on appeal were: (i) whether the plaintiffs’ prior STR use was lawful (and therefore could qualify as a lawful preexisting nonconforming use), which turned primarily on whether the above-garage “Loft” was an Accessory Dwelling Unit (ADU) under the Hampton Zoning Ordinance (HZO); and (ii) whether the Town could defeat nonconforming-use status by arguing the CRO was “invalid” due to alleged nondisclosure (an argument the Supreme Court held was not preserved).

2. Summary of the Opinion

The Supreme Court affirmed. It agreed with the trial court that the Loft was not an ADU under the HZO because it lacked mandatory “cooking” components required by the ordinance: a stove and a sink. Because the property did not contain an ADU as defined by the ordinance, the plaintiffs’ STR activity did not violate the prior HZO ADU restrictions (including the prohibition on rentals of less than six months). The Court further declined to consider the Town’s alternative argument that the CRO was invalid due to nondisclosure because that issue was not preserved for appellate review. The Court also noted the Town did not challenge the trial court’s conclusion that STRs were permitted in the plaintiffs’ zoning district before the 2023 STR ordinance. Having found a lawful preexisting nonconforming use, the Court did not reach the special-exception question.

3. Analysis

A. Precedents Cited

  • Dartmouth Corp. of Alpha Delta v. Town of Hanover, 169 N.H. 743, 749 (2017)
    Cited for the general proposition that judicial review in zoning cases is limited. This frames the appellate posture: courts do not freely substitute their judgment for the ZBA’s but operate within a constrained review structure.
  • Dietz v. Town of Tuftonboro, 171 N.H. 614, 618 (2019)
    Used for the burden and standard on appeal from a ZBA decision: the challenger bears the burden; ZBA findings are prima facie lawful and reasonable; and the reviewing court focuses on whether there is evidence upon which the ZBA’s findings could reasonably be based.
  • Monadnock Rod and Gun Club v. Town of Peterborough, 177 N.H. 70, 74 (2024), 2024 N.H. 61, ¶10
    Cited for the Supreme Court’s standard of review of the trial court’s decision (upheld unless unsupported by the evidence or legally erroneous).
  • Monadnock Rod and Gun Club, 177 N.H. at 75, 2024 N.H. 61, ¶¶13-15
    Substantively important: the Court relied on its rule that a use that violates a zoning ordinance is “illegal and therefore ineligible to later qualify as a lawful nonconforming use.” The Town invoked this principle to argue the plaintiffs’ STR was illegal if the Loft was an ADU (because ADU-containing properties could not be rented for less than six months under HZO § 3-A.4(c)). The Court accepted the legal principle but found the factual predicate (that the Loft was an ADU) was not met.
  • Batchelder v. Town of Plymouth Zoning Bd. of Adjustment, 160 N.H. 253, 256-57 (2010)
    Provides the interpretive framework for zoning ordinances: de novo review; apply traditional statutory interpretation; give words their common meaning; do not add words; read the ordinance as a whole. The Court used Batchelder to justify focusing on the ordinance text and rejecting interpretations that effectively delete terms.
  • Appeal of Vasquez, 175 N.H. 450, 453 (2022)
    Used for the canon that courts give effect to all words and presume no superfluous language. This directly supported the Court’s conclusion that “stove” and “sink” in HZO § 3-A.3 cannot be ignored.
  • In the Matter of Liquidation of Home Ins. Co., 157 N.H. 543, 553 (2008)
    Cited for the proposition that “must” denotes a mandatory requirement. This was pivotal to construing HZO § 3-A.3’s parenthetical list (“stove, refrigerator and sink”) as requirements rather than mere examples.
  • Blagbrough Family Realty Trust v. A & T Forest Prods. Inc., 155 N.H. 29, 35 (2007)
    Applied to preservation: issues not raised below are not preserved for appellate review. The Court invoked this to decline the Town’s “invalid CRO due to nondisclosure” argument.

B. Legal Reasoning

  1. The “lawful” predicate for nonconforming use turned on ADU classification.
    The Town argued that a preexisting nonconforming use cannot arise from a use that was already in violation of the zoning ordinance. The Court agreed with that principle and treated Monadnock Rod and Gun Club as controlling on illegality defeating lawful nonconforming-use status. Therefore, the case hinged on whether the Loft triggered the ADU rules that would have prohibited STR rentals (less than six months) under HZO § 3-A.4(c).
  2. The Court applied textual interpretation and held the Loft did not meet the ordinance’s ADU definition.
    The Court read HZO § 1.6 (defining ADU) together with HZO § 3-A.3 (“Provisions for Living Facilities”), which states an ADU “must provide” independent living facilities including cooking provisions: “stove, refrigerator and sink.” The trial court found the Loft had a bed, table, microwave, refrigerator, and a bathroom—but not a cooking stove or kitchen sink. Applying Batchelder and Appeal of Vasquez, the Supreme Court refused to read “stove” and “sink” out of the ordinance; applying Liquidation of Home Ins. Co., it treated “must” as mandatory.
  3. The Court rejected a bifurcated attached/detached ADU standard.
    The Town and plaintiffs disputed whether any “stove/sink” requirements applied equally to attached and detached ADUs. The Court agreed with the trial court that requiring cooking facilities for attached ADUs but not for detached ADUs would be “illogical” and inconsistent with RSA 674:71 (2025) (noted by the Court when discussing consistency with the statutory definition).
  4. Because the Loft was not an ADU, the STR use was not illegal under the cited ADU restriction.
    Once the Court concluded the Loft was not an ADU, the Town’s illegality argument (based on HZO § 3-A.4(c)’s minimum rental period) collapsed. That supported the finding of a lawful preexisting nonconforming use.
  5. The “invalid CRO” theory failed on preservation grounds.
    The Town argued the CRO was invalid because the plaintiffs allegedly failed to disclose the Loft on the CRO application. The Court held this issue was not presented to the trial court and was therefore not preserved, relying on Blagbrough Family Realty Trust.
  6. Vesting/attachment of STR rights via the 2021 CRO.
    The Court expressly agreed with the trial court that the plaintiffs’ right to use the property as an STR “attached” when they received their CRO in 2021. The Court also emphasized that the Town did not challenge the trial court’s conclusion that, before the 2023 STR ordinance, STRs were permitted in the plaintiffs’ zoning district. Those points together supported treating the plaintiffs’ STR as a protected preexisting nonconforming use after the 2023 regulatory change.
  7. Special exception was not reached.
    Because the lawful preexisting nonconforming use issue resolved the case, the Court did not address whether the ZBA correctly denied the plaintiffs’ special exception application.

C. Impact

  • ADU definition disputes will be text-driven. The decision underscores that where an ordinance specifies required facilities (here, “stove” and “sink”), municipalities and boards cannot dilute those terms by treating them as optional, illustrative, or irrelevant—particularly when the ordinance uses mandatory language (“must”).
  • Nonconforming-use protection remains unavailable to unlawful uses, but the “unlawful” determination must be proved through correct ordinance interpretation. The Court reaffirmed the Monadnock Rod and Gun Club principle (illegality defeats lawful nonconforming-use status), yet demonstrated that towns must first establish, through the ordinance’s actual criteria, that a violation existed.
  • CROs can be consequential evidence of vested rights for STR operators. Although the Opinion turns on legality under zoning definitions, it also endorses the trial court’s conclusion that rights “attached” upon issuance of the CRO—making CRO issuance (in a district where STRs were then permitted) a potentially pivotal fact in later nonconforming-use disputes.
  • Litigation discipline: preservation matters. Municipalities seeking to rely on alleged application defects (e.g., nondisclosure) must timely present those theories to the trial court; otherwise appellate courts may decline to consider them.

4. Complex Concepts Simplified

Short-term rental (STR)
A rental for brief stays (often days or weeks), commonly arranged through platforms like Airbnb.
Accessory Dwelling Unit (ADU)
A smaller, secondary living unit on the same lot as a primary dwelling. In this case, whether the Loft qualified as an ADU depended on whether it had specified “independent living facilities,” including mandatory cooking elements: a stove, refrigerator, and sink.
Lawful preexisting nonconforming use
A use that was legal when it began, which may be allowed to continue even after zoning rules change. A key limitation emphasized by the Court (citing Monadnock Rod and Gun Club) is that an illegal use cannot later become protected as “lawful” nonconforming.
Special exception
A form of zoning approval allowing a use if specific ordinance criteria are met. The Court did not decide this issue because it resolved the case on nonconforming-use grounds.
Issue preservation
If a party does not raise an argument in the trial court, an appellate court generally will not consider it later. That rule barred the Town’s “invalid CRO” theory.

5. Conclusion

The New Hampshire Supreme Court’s decision affirms a practical and text-centered rule: when a municipality’s ordinance defines an ADU by mandatory facility requirements (including a “stove” and “sink” for cooking), zoning boards and courts must enforce those requirements as written, and cannot treat them as optional. On the facts found, the Loft lacked those required features and therefore was not an ADU; accordingly, the plaintiffs’ STR use was not unlawful under the ADU restrictions and could qualify as a lawful preexisting nonconforming use after the Town’s 2023 STR ordinance.

The Opinion also reinforces two broader procedural and doctrinal points: (1) a use must be lawful to receive nonconforming protection (as emphasized in Monadnock Rod and Gun Club), and (2) appellate courts will not rescue unpreserved arguments (as applied through Blagbrough Family Realty Trust). In combination, these holdings are likely to shape future STR and ADU disputes by focusing litigation on precise ordinance text, the factual elements of ordinance-defined terms, and careful issue preservation.