Most Key West investors read the countdown the same way. A batch of licenses is about to expire, so a batch of licenses is about to become available. That's how permit caps tend to work in most cities. A permit lapses, someone else applies, the supply refills.

That is not what happened on December 22, 2025, when roughly 280 special transient rental licenses tied to the Truman Annex went dark for good. The city's own notice to owners was explicit that those licenses would not be circulated and available for purchase by property owners in other parts of town. They just end. No auction, no waiting list, no redistribution. If you were counting on that expiration to loosen up Key West's rental license market, the opposite happened.

The Math Nobody Ran

For years, the going rate on a Key West transient license traded on the secondary market sat around $250,000 to $275,000, according to longtime Key West Realtor Bascom Grooms, who has tracked the market for decades. By 2026, that figure had climbed as high as $400,000, with some reports pricing the most desirable licenses at $500,000 or more. That's not appreciation in the ordinary sense. Nothing about the license itself changed. What changed is the number of licenses a buyer can actually get their hands on, and that number has been shrinking since 2018, when the city stopped accepting new transient license applications in most residential districts.

Every license that disappears without re-entering that pool tightens the math further. The Truman Annex license was never going to add supply back to the citywide secondary market even before this settlement expired. It only worked inside that gated community and carried its own weekly minimum. But its disappearance still matters. It removes the largest concentrated cluster of nightly rental rights in the city, and it confirms in writing that Key West will let a license vanish rather than let it move.

What the 2005 Settlement Actually Said

Go back far enough and the story starts with lawsuits, not real estate listings. In the late 1990s and early 2000s, Key West adopted ordinances restricting short-term rentals, and several property owners sued over it. One owner prevailed in 2004 after proving the property had a rental history that predated the new rules. That case led to a broader 2005 settlement between the city, the Truman Annex Master Property Owners Association, and the Shipyard Condominium Association, one that authorized roughly 280 special transient licenses with a firm expiration written into the agreement: December 2025.

Twenty years felt distant in 2005. It didn't feel distant this past winter, when the city mailed notices to 291 Truman Annex property owners confirming their licenses would go inactive on December 22 and that medallions had to be returned to the Licensing Division by February 1, 2026.

"They've had a good deal for 20 years and now it's over."

That was Mayor Dee Dee Henriquez, speaking in December about the deal coming to its scheduled end. Commissioner Monica Haskell had said much the same back in September, telling reporters that any investor down there had adequate notice of the date these rentals would end.

The $15 Million Offer the City Didn't Take

A group of Truman Annex owners tried to buy more time. Under an umbrella group called TARPO, broker Michael Behmke pitched the city a deal last fall. Owners would contribute $750,000 a year for 20 years, about $2,500 per owner annually, funneled into buying existing market-rate apartment buildings and deeding them to the city as permanent housing for police officers and firefighters. In exchange, the city would renew the neighborhood's weekly rental rights for another two decades.

The proposal never made it onto a commission agenda. Commissioner Sam Kaufman said he wasn't aware of any plan to extend the licenses and wouldn't support one, and that the city's commitments to neighbors from twenty years ago had to be honored. Commissioner Donie Lee raised a related concern: granting an extension to Truman Annex alone would invite every other Key West property owner to demand the same transient rights, a fight the city had no interest in reopening.

That fight hasn't fully closed. As of February 2026, the Foundry Homeowners' Association, representing a group of townhomes inside Truman Annex, is suing the city over the revoked licenses and returned medallions. The city has moved to dismiss the case. Until a judge rules, this particular chapter isn't completely shut, though the city's public position hasn't moved.

The Transfer Trap Buyers Keep Missing

None of the Truman Annex history matters directly if you're shopping for a transient-licensed property somewhere else in Key West, until you get to the fine print on what actually comes with the house.

Here's where buyers get surprised. Key West's city-issued transient license is tied to the property and generally transfers with the deed, but only if the property was properly grandfathered under the pre-2018 rules. Florida's separate state license through the Department of Business and Professional Regulation does not transfer at all. A new owner has to apply for their own.

A listing that says "transient licensed" is a claim, not a guarantee. Before writing an offer on a property marketed for its rental license, confirm three things directly with the city rather than trusting the listing sheet:

• Whether that specific unit's license is currently active and in good standing
• Whether the license was renewed every year without a lapse, since a single missed renewal forfeits grandfathered status permanently
• Whether the property sits inside a zoning district where transient use is actually allowed, since most residential zones prohibit it regardless of a property's rental history

Key West's Community Development Department can confirm a property's license history, and a local real estate attorney should verify the chain of title before closing. This is not a step to skip because a listing photo shows a medallion mounted on the fence.

What This Means If You're Shopping a Transient License Right Now

The Truman Annex story is a preview, not a one-time event. It shows how the city treats these licenses once a deadline actually arrives: it lets them expire rather than negotiate, even when the offer on the table includes real money for police and firefighter housing. That posture should shape how you read every "transient licensed" listing in town going forward.

A license with a clean, verified paper trail is worth defending in your offer terms and worth paying the current secondary-market premium for. A license inferred from an old MLS sheet or a prior year's rental income is a bet, not a fact. If you're still weighing whether a short-term or long-term strategy fits a specific property better, that decision runs through the same zoning and licensing questions, and we've walked through that comparison in more depth separately.

Given where prices sit today, verifying before you write the check costs far less than discovering a gap after closing.

FAQ

Can I buy a Key West transient rental license without buying the property it's attached to? No. The license is tied to the specific unit, not the owner, so it can't be sold or transferred independently of the real estate.

Does a property losing its transient license mean I can't rent it out at all? No. Owners can still rent for 29 days or longer without a transient license. What disappears is the ability to rent nightly or weekly.

Will Key West issue new transient licenses again? Not under current policy. The city stopped accepting new applications in most residential districts in 2018, and nothing in the Truman Annex outcome suggests that's changing.

Rental license history is exactly the kind of detail that reads clean on a listing sheet and gets complicated fast once you start asking the city direct questions. If you're evaluating a Key West property for its income potential, Holly's Real Estate can help you verify what a license actually guarantees before you make an offer. Schedule a free consultation and get a straight answer on what a property can legally do, not just what the listing says.