The Ninth Circuit Court of Appeals affirmed a lower court decision rejecting Diamond Sands Apartments, LLC's constitutional challenge to Clark County, Nevada's short-term rental ordinance in a ruling filed Jan. 16, 2026.
The three-judge panel upheld the U.S. District Court for the District of Nevada's denial of a preliminary injunction that would have blocked enforcement of the county's ban on unlicensed short-term property rentals. Diamond Sands had argued the local regulation violated the Eighth Amendment's Excessive Fines Clause.
Diamond Sands operates a 360-unit apartment complex in Las Vegas and challenged both the facial constitutionality of the ordinance and its application to the company's property. The apartment operator contended that Clark County's enforcement scheme unconstitutionally penalizes property owners for short-term rental activity conducted by their tenants.
The dispute centered on $4,000 fines imposed by the county for violations of its short-term rental restrictions. Diamond Sands argued these penalties were grossly disproportionate to the underlying offense, making them unconstitutional under the Excessive Fines Clause.
However, the Ninth Circuit panel found the district court did not abuse its discretion in concluding that Diamond Sands failed to demonstrate serious questions about whether the fines were grossly disproportionate. The appeals court identified several factors that justified the penalty amount.
First, the court determined that Diamond Sands bore some culpability for the violations because the company had knowledge of improper short-term rentals occurring at its property but failed to eliminate them. This finding undermined the apartment operator's argument that it was being unfairly penalized for tenant conduct beyond its control.
Second, the panel noted that the county ordinance provided alternative remedies beyond fines, though Clark County ultimately chose to impose monetary penalties. This flexibility in enforcement options supported the reasonableness of the regulatory scheme.
Third, the court found the fines were on the lower end of potential penalties, suggesting they were not excessive relative to the range of sanctions the county could have imposed.
The case reflects ongoing tensions between local governments seeking to regulate short-term rental markets and property owners challenging municipal restrictions on constitutional grounds. Short-term rental platforms like Airbnb have transformed residential property markets in tourist destinations, prompting regulatory responses from cities and counties nationwide.
Clark County's ordinance represents one approach to addressing concerns about unlicensed short-term rentals, including impacts on housing availability, neighborhood character, and local tax revenue. The county requires operators to obtain licenses and comply with various regulations before offering short-term accommodations.
Diamond Sands' challenge illustrates how property owners are pushing back against local restrictions through federal constitutional arguments. The Excessive Fines Clause of the Eighth Amendment prohibits governments from imposing penalties that are grossly disproportionate to the offense, but courts have generally given substantial deference to legislative judgments about appropriate penalty levels.
The Ninth Circuit panel consisted of Circuit Judges Mary M. Schroeder and Michelle T. Friedland, along with District Judge Karen E. Schreier of South Dakota sitting by designation. Judge Schreier authored the opinion for the panel.
The case originated in the District of Nevada before Judge Anne R. Traum, who initially denied Diamond Sands' request for preliminary injunctive relief. The apartment company appealed that ruling, leading to oral arguments before the Ninth Circuit in San Jose on Nov. 21, 2025.
The appeals court's decision does not resolve the underlying constitutional claims on the merits, but rather addresses only whether Diamond Sands met the standards for obtaining a preliminary injunction to halt enforcement while litigation continues. To obtain such relief, parties typically must show they are likely to succeed on the merits and will suffer irreparable harm without court intervention.
The ruling suggests Diamond Sands faces an uphill battle in its broader constitutional challenge to the county ordinance. The court's analysis of the proportionality question indicates skepticism about whether the company can ultimately prevail on its Excessive Fines Clause claims.
For other property owners facing similar local restrictions, the decision provides guidance on how courts will evaluate constitutional challenges to short-term rental regulations. The emphasis on property owner knowledge and culpability suggests that passive landlords who fail to police tenant violations may struggle to characterize penalties as excessive.
The case also demonstrates how courts balance local regulatory authority against property rights in the evolving short-term rental landscape. As municipalities continue developing enforcement mechanisms for rental restrictions, property owners will likely continue testing the constitutional boundaries of such regulations.
Clark County can now proceed with enforcement of its short-term rental ordinance against Diamond Sands and other violators, though the underlying litigation challenging the law's constitutionality presumably continues in district court.