Date: Jun 22, 2026

No Texas Due-Process Property Interest in Short-Term Leasing; Short-Term Rental Zoning Bans in Residential Districts Survive Rational-Basis Review

1. Introduction

Case: Marfil v. City of New Braunfels, Texas, No. 25-50025 (5th Cir. June 18, 2026).
Parties: Property owners and related entities/individuals (Plaintiffs–Appellants) vs. the City of New Braunfels, Texas (Defendant–Appellee).
Context: The City adopted a comprehensive zoning ordinance in 2006 regulating “short term rental or occupancy” of dwellings for fewer than 30 consecutive days, including prohibiting short-term rentals (“STRs”) in certain districts zoned “Residential.” The City amended the STR provisions in 2011, while keeping the same “Residential” districts at issue here as STR-prohibited.

Key factual feature: Each Appellant purchased their property after the City’s STR prohibition in the relevant Residential districts was already in place. Several Appellants sought zoning changes to permit STR use and were denied.

Issues on appeal: Whether the Ordinance, as applied, violates (1) federal and Texas due process/due course protections by depriving Appellants of a protected property interest to lease on a short-term basis; and (2) federal and Texas equal protection guarantees by allegedly arbitrary line-drawing (e.g., 29-day rentals prohibited but 30-day rentals permitted; STR bans in some districts but not others).

2. Summary of the Opinion

The Fifth Circuit affirmed summary judgment for the City. On due process/due course, the court held that Texas law does not recognize a protected property interest in “the right to lease one’s home on a short-term basis,” and thus Appellants’ due process claims fail at the threshold. On equal protection, applying rational-basis review, the court held the Ordinance’s distinctions—both the 29/30-day cutoff and the prohibition of STRs in Residential districts—are rationally related to legitimate municipal objectives such as preserving residential character and protecting neighborhoods.

3. Analysis

3.1 Precedents Cited

A. Federal procedural and standards-of-review foundations

Evanston Ins. Co. v. Mid-Continent Cas. Co., 909 F.3d 143 (5th Cir. 2018): De novo review of cross-motions for summary judgment; evidence viewed in favor of the nonmovant.
Rollins v. Home Depot USA, Inc., 8 F.4th 393 (5th Cir. 2021): Issues not raised below/adequately briefed are forfeited; used to narrow the case to an as-applied challenge.
Marfil v. City of New Braunfels, 70 F.4th 893 (5th Cir. 2023) (Mem): Prior remand allowed discovery; did not address merits—important to explain why the 2026 panel considered the full merits only after discovery and summary judgment.

B. Due process / due course: defining the protected interest under state law

Univ. of Tex. Med. Sch. at Hous. v. Than, 901 S.W.2d 926 (Tex. 1995): No meaningful distinction between federal “due process” and Texas “due course” for these purposes; supports treating the analyses as equivalent.
Hignell-Stark v. City of New Orleans, 154 F.4th 345 (5th Cir. 2025): A due process claim requires a deprivation of a constitutionally protected right; property interests are defined by state law; absence of state-law property interest is dispositive.
Mikeska v. City of Galveston, 451 F.3d 376 (5th Cir. 2006) and Schaper v. City of Huntsville, 813 F.2d 709 (5th Cir. 1987): Reinforce that due process analysis begins with whether state law confers the asserted property interest.

C. Texas STR cases: retroactivity/takings vs. the claimed due-process property interest

Zaatari v. City of Austin, 615 S.W.3d 172 (Tex. App.—Austin 2019, pet. denied): Recognized a “settled interest” (in a retroactivity context) tied to pre-ordinance STR use; the Fifth Circuit distinguishes this from a vested/constitutionally protected property interest for due process.
Village of Tiki Island v. Ronquille, 463 S.W.3d 562 (Tex. App.—Houston [1st Dist.] 2015, no pet.): Discussed STR restrictions through a regulatory-takings lens; cited to show Texas courts sometimes protect existing uses in particular doctrines, not as a categorical due-process right to STR leasing.
City of Grapevine v. Muns, 651 S.W.3d 317 (Tex. App.—Fort Worth 2021, pet. denied): Central to the Fifth Circuit’s parsing of what Texas courts have (and have not) held. The opinion emphasizes Grapevine held homeowners “do not have a vested right under the Zoning Ordinance to use them as [short-term rental]s,” and clarified it did not definitively declare a statewide vested right to STR use.
City of Grapevine v. Muns, 671 S.W.3d 675 (Tex. 2023) (Young, J., joined by Blacklock, J., concurring in the denial of the petition for review): Used to show the Texas Supreme Court has not resolved the constitutional questions and viewed that case as a poor vehicle, leaving Texas intermediate appellate decisions as the best available indicators.
Modern Builders, LLC v. City of Fort Worth, No. 02-25-00275-CV, 2026 WL 1501055 (Tex. App.—Fort Worth May 28, 2026, no pet. h.): Treated as a decisive, on-point Texas appellate resolution—“Answering the question left open in Grapevine,” it held there is no vested common-law right to use property as STRs and emphasized the proper narrowing of the interest: a right to lease generally vs. a right to lease for <30 days.
City of Dickinson v. Crystal Cruise Invs., LLC, No. 01-24-00684-CV, 2026 WL 530391 (Tex. App.—Houston [1st Dist.] Feb. 26, 2026, no pet.): Strongly supports the Fifth Circuit’s conclusion, holding the right to lease is not absolute, zoning classifications/uses are not vested merely by commencement, and—critically—an ordinance predating purchase defeats any claimed vested right.
Tex. Dept. of State Health Servs. v. Crown Distrib., LLC, 647 S.W.3d 648 (Tex. 2022): Used for the proposition that if the due course clause does not protect the asserted interest, courts need not reach rational-basis/oppressiveness arguments.

D. Erie-guess methodology (how federal courts determine unsettled state law)

McGlothin v. State Farm Mut. Ins. Co., 925 F.3d 741 (5th Cir. 2019): Describes the “Erie guess” when the state’s highest court has not spoken.
Am. Int'l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558 (5th Cir. 2010): Sets the hierarchy—Texas Supreme Court guidance first, then Texas courts of appeals.
Weatherly v. Pershing, L.L.C., 945 F.3d 915 (5th Cir. 2019): Federal courts should not adopt innovative theories of state law; apply state law as it exists.
In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 888 F.3d 753 (5th Cir. 2018) (quoting Jackson v. Johns-Manville Sales Corp., 781 F.2d 394 (5th Cir. 1986) (en banc), abrogated on other grounds by Salve Regina Coll. v. Russell, 499 U.S. 225 (1991)): Federal courts should not change state substantive law; that is for the state supreme court.

E. Equal protection and rational-basis review (federal and Texas)

Lindquist v. City of Pasadena, 669 F.3d 225 (5th Cir. 2012) (quoting Bell v. Low Income Women of Tex., 95 S.W.3d 253 (Tex. 2002)): Federal analytical approach applies to Texas equal protection; the Fifth Circuit therefore did not separately analyze the Texas provision.
Mahone v. Addicks Util. Dist., 836 F.2d 921 (5th Cir. 1988) (citing City of Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432 (1985) and Plyler v. Doe, 457 U.S. 202 (1982)): Equal protection requires similarly situated persons be treated alike.
Golden Glow Tanning Salon, Inc. v. City of Columbus, 52 F.4th 974 (5th Cir. 2022) (quoting Tex. Ent. Ass'n, v. Hegar, 10 F.4th 495 (5th Cir. 2021)): Defines “similarly situated” as “in all relevant respects alike.”
Glass v. Paxton, 900 F.3d 233 (5th Cir. 2018): Confirms rational-basis review applies where no suspect class or fundamental right is implicated.
FCC v. Beach Commc'ns, Inc., 508 U.S. 307 (1993): Core rational-basis standard; laws upheld if any reasonably conceivable facts provide a rational basis; legislatures may proceed incrementally; rational speculation need not be supported by evidence.
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998) (citing Williams v. Lee Optical of Okla., Inc., 348 U.S. 483 (1955) and Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981)): Texas zoning ordinances survive if designed to accomplish a police-power objective and rationally related; “fairly debatable” decisions must be upheld; review focuses on what lawmakers could have believed at enactment.
Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926): Foundational deference to municipal zoning judgments; courts do not second-guess wisdom if any substantial reason supports the ordinance.
Shelton v. City of College Station, 780 F.2d 475 (5th Cir. 1986): Distinguishes “conceivable rational basis” from probing actual motives; cautions against converting rationality into an evidentiary trial; cites Gerald Gunther, Foreword: In Search of Evolving Doctrine on a Changing Court: A Model for a Newer Equal Protection, 86 Harv. L. Rev. 1 (1972).
U.S. R.R. Ret. Bd. v. Fritz, 449 U.S. 166 (1980) (quoting Matthews v. Diaz, 426 U.S. 67 (1976)): Line-drawing inevitably puts near-similar cases on different sides; that is ordinarily for legislatures, not courts.
Jackson Ct. Condos., Inc. v. City of New Orleans, 874 F.2d 1070 (5th Cir. 1989): Recognizes protection of residential integrity as a legitimate zoning objective.
Yur-Mar, L.L.C. v. Jefferson Par. Council, 451 F. App'x 397 (5th Cir. 2011): Enhancing property values, promoting economic development, and sense of community can supply rational bases.
Draper v. City of Arlington, 629 S.W.3d 777 (Tex. App.—Fort Worth, 2021, pet.denied) (quoting Ewing v. City of Carmel-By-The-Sea, 286 Cal. Rptr. 382 (Cal. Ct. App 1991)): Cited (in a footnote) for the proposition that transient occupancy can threaten residential character and community stability—supporting STR restrictions as rational.

3.2 Legal Reasoning

A. Due process/due course: the claim fails at the “protected property interest” step

The court framed due process analysis as a two-step inquiry beginning with whether the plaintiff has been deprived of a constitutionally protected liberty or property interest. Because “The Constitution does not create property interests,” the court treated Texas law as dispositive on whether the claimed interest exists.

Appellants characterized Texas precedent as recognizing a protected interest in “the right to lease one’s home on a short-term basis.” The Fifth Circuit rejected that reading. It distinguished:

Cases protecting preexisting STR activity (often in retroactivity or takings postures) such as Zaatari v. City of Austin and Village of Tiki Island v. Ronquille, from
A general, freestanding due-process property interest to use property as an STR regardless of zoning, which the court found Texas appellate courts do not recognize.

The Fifth Circuit then made an Erie prediction, relying heavily on the two most recent and on-point Texas decisions—Modern Builders, LLC v. City of Fort Worth and City of Dickinson v. Crystal Cruise Invs., LLC—both of which rejected a vested constitutional right to STR use, especially where the ordinance predates acquisition. With no Texas Supreme Court decision establishing such a right, and with Texas courts of appeals squarely rejecting it, the Fifth Circuit held it must “apply that law as it currently exists,” and therefore Appellants’ due process/due course claims fail.

Notably, the court adopted (and treated as legally significant) the narrowing of the asserted interest: a general “right to lease” may be a core incident of ownership, but a right to lease for fewer than 30 days is a specific land use not entitled to categorical vested-right protection.

B. Equal protection: deferential rational-basis review validates both the time cutoff and zoning boundaries

Even assuming the Ordinance treats similarly situated property owners differently, rational-basis review governed because no suspect class or fundamental right was implicated. Under FCC v. Beach Commc'ns, Inc. and related authority, Appellants bore the burden to negate every conceivable rational basis.

The court identified legitimate interests expressly reflected in the Ordinance and amendment: protecting health, safety, and general welfare, and specifically “preserving residential character” and protecting residential neighborhoods. It then held:

The 29/30-day distinction is permissible legislative line-drawing, and courts do not second-guess whether a different cutoff might be “better.”
The district-based STR prohibition is likewise rational line-drawing; the fact that some properties are near commercial/residential borders does not make the map irrational, because some borderline cases are inevitable under U.S. R.R. Ret. Bd. v. Fritz.
The City was not required to prove empirically that STRs cause more nuisances than long-term rentals; rational speculation suffices under Beach Commc'ns, Inc..

3.3 Impact

Federal due-process challenges to Texas STR restrictions face a threshold barrier: Absent a Texas Supreme Court shift, plaintiffs generally cannot premise a due process/due course claim on a purported property interest in “the right to lease one’s home on a short-term basis,” especially where the ordinance predates the purchase.
Sharp distinctions matter: The opinion signals that litigants must precisely define the asserted interest; courts will distinguish between a general right to lease and a specific right to lease for fewer than 30 days.
Equal-protection claims against STR zoning will rarely succeed: Municipalities can rationally pursue “preserving residential character” and may draw categorical cutoffs (duration and district boundaries) without producing nuisance studies or proving actual effectiveness.
Strategic litigation consequences: The decision implicitly channels disputes toward other doctrines (e.g., statutory claims, state-law administrative review, or takings/retroactivity where applicable) rather than substantive due process/equal protection—particularly for post-ordinance purchasers.

4. Complex Concepts Simplified

As-applied vs. facial challenge: A facial challenge claims a law is unconstitutional in all (or most) applications; an as-applied challenge claims it is unconstitutional as enforced against the particular plaintiffs. The court addressed only the as-applied challenge because the facial theory was not preserved/briefed.
Protected property interest (due process): Due process does not protect every economic desire; it protects only “property” interests that state law recognizes as legally enforceable entitlements. If state law does not recognize the claimed entitlement, the due process claim ends.
Vested right vs. settled interest: A “vested right” is a definite legal right that cannot be taken away without constitutional scrutiny; a “settled interest” (as discussed in some retroactivity cases) can reflect reliance on established practice but may not equal a vested due-process property right.
Erie guess: When state law is unsettled, a federal court predicts how the state supreme court would rule, giving weight to intermediate appellate decisions and avoiding “innovative” expansions of state law.
Rational-basis review: The most deferential constitutional standard: a law stands if any conceivable rational justification supports it. Courts do not require proof the law works perfectly, only that lawmakers could have rationally believed it would advance a legitimate goal.

5. Conclusion

Marfil v. City of New Braunfels, Texas cements two practical rules for STR zoning disputes in Texas federal courts: (1) Texas law, as currently articulated by Texas courts of appeals, does not recognize a due-process/due-course protected property interest in leasing a home on a short-term basis—particularly where the STR restriction predates the owner’s purchase; and (2) STR restrictions, including a 30-day cutoff and district-based prohibitions, readily survive equal protection rational-basis review when justified by preserving residential character and related police-power objectives. The opinion’s defining move is its insistence on properly narrowing the claimed “property interest” and its reaffirmation that courts will not constitutionalize disagreements over zoning line-drawing.