Say a buyer is touring a cottage near Walloon Lake Village and the seller shows a full booking calendar. In Melrose Township, that buyer is looking at income that stops at closing. Under the township's short-term rental law, a license lasts one calendar year or until the property is sold, whichever comes first. Across the lake in Evangeline Township, the rule goes further. A license becomes void when ownership changes. That includes the transfer of a controlling interest in an LLC, trust, partnership or corporation that owns the home.
So on Walloon Lake, the right to rent a property belongs to its owner and is limited by the township and the septic system. A buyer pricing rental income into an offer is paying for something they will need to apply for again from scratch. This fall, the rules around that application are still changing.
What Closing Does to a Melrose License
Melrose Township's rules are in Ordinance No. 1 of 2025. Any rental of less than 30 days needs a license issued to the owner, and each rental dwelling needs its own license. Every license expires on December 31. Owners can apply for the next year starting October 1, so the 2027 renewal window is open now.
The costs are set out in the township's fee schedule, effective April 1, 2026. A license costs $300 to apply plus a $700 license fee, or $1,000 in total. Operating without a license carries a $1,000 fee, and a rental violation carries a $500 fee. The township enforces these rules. At its August 11, 2026 meeting, the board heard there were 38 licensed rentals, eight more waiting for health department approval, and two new applications. Enforcement had started, though no citations had been issued yet. The township's Enforcement Officer, Jonathan Scheel, also watches social media and rental sites for unlicensed listings.
The number of licenses is now becoming limited. According to draft minutes from the September 8, 2026 meeting, the board voted 4–1 to cap licenses at 55 for the 2027–28 licensing year. The same minutes count 44 current licenses. Under that draft, about 11 licenses would remain open across the township. A buyer whose seller's license ends at sale would compete for one of them. These minutes are still in draft, and the ordinance text posted on the township's site has not been amended to match. Treat the cap as a recorded board vote, not as settled law.
The Septic System Sets the Guest Count
Most buyers estimate rental income from the bedroom count. Melrose uses a different measure. For a rental on a septic system, the maximum number of guests equals the number of bedrooms the septic system was designed for, as stated in the Septic Inspection Report. No rental may exceed two people per bedroom. A five-bedroom house on a system designed for three bedrooms is licensed for a three-bedroom house's worth of guests. The license itself states the maximum number of people allowed.
This rule was written with the lake in mind. In August 2026, Bay Township Supervisor Gaudard met with the Walloon Lake associations, the surrounding townships and the county health department to talk about septic systems and water quality. The health department named poor paperwork and short-term rentals as factors that can harm the lake. Its example was a three-bedroom home with a 1,000-gallon tank, which may work for a typical household but may not be designed for 14 people. Bay Township's minutes describe Melrose's inspection requirement as a possible model for other townships.
Melrose is considering stricter septic rules for 2027–28. The September draft minutes record agreement, but not a final vote, on a septic evaluation every five years and proof of pump-out every two years. They also record agreement that owners who live on site will get no exemption, so every property is treated the same.
Sewer is changing the picture too. Melrose Township says its sewer system handles about 20,000 gallons per day and is at capacity. The proposed expansion would raise treatment capacity to as much as 50,000 gallons per day and extend service east along M-75 North to US-131. Properties that front the sewer lines would be required to connect. The township's posted schedule aims for funding approval by March 31, 2027, with lateral lines built between April 2028 and April 2030. These are targets, not a funded project. The septic-based guest limit in the ordinance applies to rentals that use a septic system. So for a parcel along the proposed route, whether and when it connects to sewer could matter to its rental plan.
Same Lake, Five Rulebooks
Walloon Lake's shoreline is split among five townships. Bear Creek and Resort are in Emmet County. Bay, Evangeline and Melrose are in Charlevoix County. Their rental rules vary a lot.
| Township | License program | Cap | Rental frequency | Guest limit basis | License at sale |
|---|---|---|---|---|---|
| Melrose | Yes, Ordinance No. 1 of 2025 | 55 voted for 2027–28, in draft minutes | Twice per Thursday–Wednesday week | Septic design capacity, max two per bedroom | Ends at sale |
| Evangeline | Yes, 2021 ordinance | 45 rentals, one per property | Once per Thursday–Wednesday week | Waterfront frontage and lot size | Void on transfer, including controlling interest in an LLC or trust |
| Bay | No standalone program in posted code | None found | None found | None found | Not applicable |
| Bear Creek | No program found; Emmet County administers zoning | None found | None found | None found | Not applicable |
| Resort | No standalone program in posted code | None found | None found | None found | Not applicable |
Evangeline limits rentals by frontage and lot type. Waterfront homes with less than 100 feet of frontage may host six adults and six minors. Waterfront homes with 100 feet or more may host eight adults and eight minors. Non-waterfront lots of up to 20 acres allow 10 adults and 10 minors, and larger lots allow 12 of each. The township caps rentals at 45, with one per property. Owners must have a local contact available 24 hours a day who can respond within 30 minutes, and nearby neighbors must have that contact's information. The township's application page still links to the 2021 ordinance.
The three townships without a program are each in a different position. Bay Township's posted zoning code, amended through January 2024, has no separate rental licensing chapter. But its supervisor is the one who brought the Melrose septic model back to the board this summer. Emmet County handles zoning for Bear Creek Township, and no Bear Creek rental licensing program turned up in the materials reviewed for this post. Resort Township's planning commission discussed rental licensing in November 2025 but did not set a plan. A January 2026 discussion draft would bar rentals of less than 30 days in accessory dwelling units, with an exception for an unspecified zoning district.
"No program found" in a posted code is different from "no restrictions." The parcel's zoning, a subdivision's deed restrictions and a homeowners association's rules can all limit rentals. Melrose's board has agreed it will not enforce private association rules. It plans to add language saying owners are still bound by any stricter private restrictions. Evangeline's ordinance also says it does not override deed restrictions or condominium bylaws.
What a Buyer Should Verify Before Pricing Rental Income
Because the license depends on the owner, the septic system and the township, each of those needs checking.
- The township. Confirm which of the five townships the parcel is in. Two cottages a short paddle apart can fall under different rules.
- The septic design capacity. In Melrose, ask for the Septic Inspection Report and read how many bedrooms the system was designed for. That number sets the guest count, whatever the house's bedroom count.
- The cap. Find out where the township stands against its limit when you plan to apply. In Melrose, the license count was 44 under a voted cap of 55 for 2027–28 as of September 2026.
- How the property is owned. In Evangeline, transferring a controlling interest in an LLC or trust voids the license. Changing the ownership structure does not get around the rule.
- Private restrictions. Read the deed restrictions, HOA rules or condominium bylaws. Melrose has said it will not enforce them, and Evangeline's ordinance says it does not override them.
- The sewer route. For Melrose parcels near M-75 North, see whether the property fronts a proposed sewer line, since connection would be mandatory.
For Sellers With a Rental History
A seller's booking record still says something about demand, and an experienced buyer will value it. But in Melrose and Evangeline the license itself does not transfer. A listing is on firmer ground when it presents the paperwork a buyer will need for a new application: the septic report showing design capacity, pump-out records, and the parcel's township. Melrose is also still working through other issues. Neighborhood density near clusters such as North Shore and Springbrook was tabled pending a map. So was the treatment of "cabin courts" such as Windcrest on Walloon. Whatever the board decides could affect what a buyer can do with a property next year.
Frequently Asked Questions
Can I take over the seller's Melrose rental license? No. A Melrose license ends when the property is sold, and the new owner has to apply for a new one.
Is the 55-license cap in Melrose final? The board's 4–1 vote is recorded in draft minutes from September 8, 2026, and it applies to the 2027–28 licensing year. The posted ordinance had not been amended to reflect it as of early October 2026.
How often can a Melrose property be rented? Up to twice in any Thursday-to-Wednesday week. The board voted 5–0 in September 2026 to keep that limit.
This post is general information, not legal, tax or financial advice. Confirm current rules with the township before you act.
If you are weighing a Walloon Lake property for part-time rental, or getting a rental-ready cottage ready to list, the septic report, the township and the license status belong in the conversation before price does. Pat Leavy works through these details with buyers and sellers every season. Schedule a free consultation to review a specific parcel before you commit.
