On Dec. 22, 2025, nearly 300 homes in Truman Annex lost the right to rent by the week. The cause was a 20-year clock in a 2005 legal settlement, and it ran out. The city closed every one of those transient licenses and did not reissue them to anyone else. In court, the city has described what it is enforcing as a contract, not a new ordinance.
That is the most useful fact a Key West buyer can take from the past year. In this city, the right to rent short-term is a separate instrument attached to a property. It has its own origin and its own terms, and in at least one well-known neighborhood it had an end date. A listing that says "transient licensed" tells you a license exists today. It does not tell you why it exists or how long it will last.
A right that came out of a lawsuit
Key West restricted transient rentals through ordinances in the late 1990s and early 2000s, and property owners challenged those rules in court. In 2004, one owner won by showing the property had been rented legally before the restrictions took effect. That ruling led to a broader settlement in 2005 between the city and Truman Annex property owners. Many owners were allowed to keep renting short-term. Others, including owners in the Foundry section, joined the settlement by paying a fee.
The settlement also included a condition: the right to operate short-term rentals would expire after 20 years. Keys Weekly's reporting puts the affected group at 291 Truman Annex owners, and Resolution 05-357 is the city document tied to the agreement.
For two decades, a buyer in the gated enclave next to Old Town could offer weekly rentals. Keys Weekly called those "significantly more lucrative than the monthly vacation rentals allowed at most properties in town without a pricey transient rental license." Those weekly rights were real. They were also temporary from the very first day.
How the city wound it down
The wind-down was administrative and precise. These are the dates that mattered:
| Date | What happened |
|---|---|
| Sept. 3, 2025 | Code Enforcement Director Christopher Counsellor sends a memo to the mayor and commissioners. Renewal fees are pro-rated for Oct. 1 to Dec. 22 so that every Truman Annex license expires on the same day. |
| Dec. 5, 2025 | The city mails letters notifying Truman Annex owners of the expiration. |
| Dec. 22, 2025 | Licenses go inactive and void, and the properties can no longer advertise or operate as short-term rentals. |
| Feb. 1, 2026 | Deadline for returning city-issued medallions to the Licensing Division. |
Owners still had a fallback. They could apply for a non-transient license and rent for a month or longer, and the city set that fee at $16.65. Before the deadline, Truman Annex Residential Property Owners chair Michael Behmke said owners would rent monthly all year instead of for only six months. Property manager Craig Tellerd said he already had eight monthly rentals booked for 2026, with signed leases and deposits. Behmke also said owners had generally bought their properties for personal use and would not turn them into full-time rentals.
The homes kept their value as places to live and as monthly rentals. The weekly-rental income, and whatever share of a purchase price it once supported, went away on a known date.
Why the licenses left the pool entirely
The Truman Annex sunset matters to buyers well beyond the gates because of what happened to the licenses afterward. A September letter from the city said all active Truman Annex transient licenses would be closed automatically in the licensing system on Dec. 22, 2025. Keys Weekly explained that this meant the licenses would not be put back into circulation for owners elsewhere in town to buy.
Key West's transient licenses can be moved from one property to another through a formal process, which gives them value beyond any one house. When a large group of licenses expires and is retired instead of reissued, the citywide supply of transient rights gets smaller. Every remaining transferable license becomes part of a smaller pool.
An offer from the owners did not change that outcome. In 2025, Behmke presented a proposal for owners to put $750,000 a year, $15 million over 20 years, toward buying multifamily units that would be deeded to the city as affordable rental housing for Key West Police and Fire Department personnel. In return, the city would extend the weekly-rental rights for another 20 years.
City officials explained their objection in terms of precedent. Commissioner Monica Haskell said granting new transient licenses to Truman Annex would likely bring "multiple lawsuits from every other property owner who wants permission to offer transient rentals." Commissioner Donie Lee said he had been advised that doing it for one neighborhood would mean offering the same rights to everyone, "a Pandora's box that I'm not willing to open." Mayor Dee Dee Henriquez said she had opposed an extension since she first ran for office. Commissioner Sam Kaufman said the city's earlier commitments to neighbors "must be honored." The proposal never made it onto a commission agenda.
From that reasoning, a buyer can infer that the city treats transient rights as a closed system. It has shown no interest in creating new licenses, even with a $15 million housing contribution on the table.
The Foundry case tests the source of the right
On Dec. 22, 2025, the day the licenses expired, the Foundry Homeowners Association sued the city. It asked for declaratory and injunctive relief and damages exceeding $100,000. The case covers 29 Foundry townhouses. It is assigned to Circuit Judge Tim Koenig and was placed on a streamlined civil track, which is a procedural step and not a ruling.
The owners make two arguments. First, they cite Section 509.032 of Florida law, which generally bars local governments from prohibiting vacation rentals or regulating how long and how often they are rented. Second, they argue that years of rental activity gave them vested rights. The statute preserves local rules adopted on or before June 1, 2011.
In its Feb. 16 motion to dismiss, the city frames the dispute as a contract case. "This is not a new ordinance," its filing states. "It is a contract that the Foundry voluntarily joined." The city says state preemption applies to laws and ordinances, not to private agreements. It also says the vested-rights claim is time-barred. Owners who claimed historic rental use in 2005 had to apply for nonconforming-use status with rental records from before 1998, and the deadline was August 2005. According to the city, Foundry members never applied.
Some Truman Annex owners have pointed to settlement language that allows rentals to continue if permitted "by law or agreement at that time." In the latest reporting we found, from late February 2026, no hearing date had been set on the city's motion. We found no public report of a ruling since then. Treat the outcome as unresolved.
For buyers, the arguments matter more than the outcome. Both sides agree that the origin of a rental right decides its fate. A right that rests on documented use from before the restrictions is treated one way. A right that rests on a settlement someone signed is treated another way.
Moving a license is a land-use application
A buyer who wants to add short-term rental rights to a home faces a formal process. The city's transfer application moves a transient unit and its license from a "sender" site to a "receiver" site. Owners of both properties have to apply and sign. The application goes through Development Review Committee and Planning Board review. If the receiving site is in a condominium or HOA community, the application also requires proof of association approval.
The fees listed on the city's posted application:
| Fee | Amount |
|---|---|
| Transfer application | $5,896.43 |
| Advertising and noticing | $414.49 |
| Fire review | $147.41 |
| Total | $6,458.33 |
Those fees come before the price of the license itself, which is negotiated privately between the two owners. The process also takes time, needs two boards to sign off, and depends on an association that can say no. A contract that assumes a license transfer will close smoothly should include time for that review.
What to confirm before an offer on a "licensed" property
Truman Annex shows that the questions about a license belong in due diligence. Raising them after closing is too late. For any Key West listing marketed with transient rights, confirm these points with the City of Key West Licensing Division and your closing attorney:
- The origin of the right. Find out whether it is grandfathered from documented historic use, was transferred in through the sender and receiver process, or comes from a settlement or other agreement with its own terms.
- Any end date or condition. Truman Annex had a 20-year sunset written into its agreement from the start. Ask for the governing document, not a summary of it.
- Whether the license and medallion are active today. The city closed the Truman Annex licenses in its own licensing system. Check the status directly with the city.
- The association's position. Condominium and HOA approval is part of the transfer process, and association documents can limit rentals on their own. Our Sunset Key analysis looks at how an HOA rental rule shapes an entire market.
- What the home earns without the license. The non-transient monthly license is the fallback in most of the city, so underwrite the property on monthly income as well as weekly income.
None of this is legal advice. Confirming the source of a rental right is title-level due diligence. For a property bought partly for its rental income, the license belongs in the same review as the survey and the deed. Our guide to buying a historic home in Old Town covers the rest of that review, and the Key West neighborhood page covers the city's other micro-markets.
If you are weighing a Key West property where rental rights affect the price, or you own one and want to know how its license affects value, Lisa Swanson can trace where that right comes from before it becomes part of a negotiation. Start with a confidential conversation or an instant home valuation, and we will start with the license paperwork.
