A judge struck down Folly Beach's short-term rental cap on August 14. City council voted five days later to appeal it. If you're under contract on a Folly Beach rental property right now, or thinking about writing an offer this fall, none of that changes the rule that will actually determine what you can do with the house on closing day: the license does not come with the sale.
That's been true since 2023, and it has nothing to do with the litigation making headlines this week. The city's own short-term rental page states it plainly. No rental license is transferable. Every new owner has to apply from scratch, and which license they can even apply for depends on how they intend to use the property.
What actually happened on August 14, and what it didn't touch
Ninth Judicial Circuit Judge Thomas J. Rode ruled in two related cases, Park Lane Partners LLC and Elizabeth Spratt Cooper v. City of Folly Beach and Thomas Jermyn v. City of Folly Beach, that the city's voter-approved cap of 800 investor short-term rental licenses was adopted the wrong way. South Carolina law reserves the power to levy taxes for city council, not for a citizen referendum, and Rode found that the registration fee funding the cap functioned as a tax. He voided the cap and the fee from the outset.
City council met on August 19, went into executive session for legal advice, and voted to appeal. In the same meeting, council gave first-reading approval to a moratorium on new short-term rental licenses that would run until a third-party study of the ordinance wraps up, with a stated expiration of February 19, 2027, or completion of the study, whichever comes first. Because the city filed its intent to appeal, the stay on Rode's order holds while the case works through the appellate courts, which means the cap and its waitlist stay in force in practice even though a judge has already called the underlying process unlawful.
Ainsley Tillman, the attorney representing the plaintiffs, made the point publicly that a moratorium enacted this fast, on the heels of a ruling that found applicants including those on the waitlist "entitled to licenses," looks like an attempt to hold the line the court just removed. Mayor Chris Bizzell has described the moratorium differently, as a way to limit the city's legal exposure while the appeal plays out rather than a fresh policy fight.
Whichever framing you find more persuasive, the practical result for anyone closing on a rental property this fall is the same. The cap is contested but enforced. The waitlist is frozen but real. And the rule that decides whether a new owner keeps any rental income at all was never part of this lawsuit in the first place.
The rule that was never on trial
Every Folly Beach short-term rental license is tied to the person who holds it, not the address. Sell the house, and the license doesn't go with it. The buyer has to start over, and where they land depends on how they'll use the property.
If a buyer occupies the home as a primary residence and qualifies for the 4% owner-occupied property tax rate, they can apply for an Owner-Occupied Short Term Rental license, capped at 72 rental nights a year. If the buyer doesn't occupy it and the property is taxed at the 6% investor rate, they need an Investor Short-Term Rental license, and right now the city is not projecting new ISTR licenses to open up. As of last fall, more than 185 homeowners sat on the waitlist behind 926 grandfathered licenses that would first have to lapse. Only three lapsed in 2024.
The consequences of this rule showed up in court well before the August ruling. Post and Courier reporting from October 2025 on a lawsuit filed by Folly Beach homeowner Paulette Sigmon described a beach house she bought a decade earlier specifically to generate short-term rental income. When her property management company failed to renew her license in 2024, she lost her spot permanently and can now only rent the home 72 nights a year as an owner-occupant, a fraction of what the property produced under an ISTR license. Her attorney summarized the core problem in a single line worth remembering if you're evaluating a Folly Beach rental purchase: the license doesn't transfer with a home sale, and for income-generating property, that's a significant loss.
What the price data is already pricing in
You can see this mechanic working on the market itself, separate from anything the county-wide rebalancing is doing to prices elsewhere. A property on East Ashley Avenue that had been listed on and off since 2023 asking $4 million sold in October 2025 for $1.4 million. A condo that came on the market in February 2025 at $500,000 took eight months to sell, and only after a $30,000 cut. Agents watching the Folly market at the time described these as sharper discounts than the broader Charleston County slowdown would explain on its own.
That gap is the license risk getting underwritten in real time. A buyer evaluating a Folly Beach rental property today isn't just pricing the house. They're pricing the odds that they'll ever hold a license that lets them rent it the way the seller did, and right now, for a non-owner-occupied purchase, those odds run through a closed waitlist with hundreds of names ahead of them.
Four license categories, one gate that decides your options
| License type | Who qualifies | Tax rate tie | Current status |
|---|---|---|---|
| Long-Term Rental (LTR) | Any owner renting 30+ days at a time | Not rate-restricted | Open, no cap |
| Owner-Occupied Short-Term (OSTR) | Primary residents, up to 72 rental nights per year | Requires 4% owner-occupied rate | Open |
| Investor Short-Term Rental (ISTR) | Non-owner-occupants, renewal only in most cases | Requires 6% investor rate | Waitlist closed to new applicants; heirs and medical hardship cases excepted |
| Provisional Short-Term Rental (PSTR) | Buyers closing on a property with rentals already booked | Tied to the SC Vacation Rental Act | Valid 90 days post-closing only |
The provisional license is the one most buyers don't know exists until they're already under contract. Under the South Carolina Vacation Rental Act, a new owner can get a temporary 90-day license to honor bookings the seller already had on the calendar. To get it, you need the closing date documented in a closing statement or signed contract, the seller's list of qualified rentals, the rental management agreement, and proof the bookings were made before closing. It buys you three months. It does not convert into an ISTR license when it expires.
What to verify before you write an offer, or accept one
If short-term rental income is part of your math on a Folly Beach purchase, the due diligence has to happen before you remove contingencies, not after you're at the closing table.
- Ask the seller for the current license number and confirm directly with the city that it's active and in good standing
- Get written confirmation from the city on whether any license transfers, and if not, what path exists for the specific property and your intended use
- If you're relying on the 90-day provisional license, assemble the closing documentation, booking list, and management agreement before closing, not after
- Confirm which property tax rate you'll qualify for, since that alone determines whether you're even eligible to apply for an OSTR or ISTR license
- Check HOA or condo governing documents separately. City approval doesn't override an association's own rental restrictions
- Ask about enforcement history on the specific address, including any prior violations or license lapses tied to the property
Sellers face the mirror version of this. If your listing's value depends on rental income, disclosing the license status accurately, and being honest that it won't automatically pass to a buyer, is part of representing the property fairly. Buyers who discover this after signing don't blame the ordinance. They blame the transaction.
A few questions this raises
If I inherit a Folly Beach rental property, do I get the previous owner's license? The city has carved out an exception for licenses obtained through inheritance, separate from the general no-transfer rule. If you're inheriting rather than purchasing, contact the city's licensing office directly, since the documentation requirements differ from a standard sale.
I'm already under contract on a Folly Beach rental. Does the moratorium affect my closing? The proposed moratorium includes exceptions for qualifying applications already submitted before the August 19 vote and for provisional licenses tied to closings under the Vacation Rental Act. Confirm your specific timeline with city staff rather than assuming either way.
If Folly Beach loses its appeal, does the cap just go away? Not automatically. The court found fault with how the cap was adopted, not with the city's authority to regulate short-term rentals at all. City officials have said council could pass a new cap through the proper legislative process regardless of how the appeal ends.
Folly Beach's rental rules are unusually specific, and they're moving faster this year than most buyers expect. If you're weighing a purchase or a sale where short-term rental income matters, Charleston Beach Life can walk through the current license landscape with you before you're locked into a contract. Schedule a free consultation to get the specifics for your address before you make an offer.
