Post by High Priestess on Jan 16, 2016 14:28:39 GMT
There are a few court cases having to do with short term rental laws -- actually both with a similar issue about whether short term rentals are a residential use of property.
(1) A Case in Colorado, Houston V. Wilson MEsa Ranch HOA, where a court affirmed that short term rentals are not a commerical use of property but a residential use.
(2) A case in Texas, Zagray V. NBRC, about whether a couple has the right to do short term rentals -- the HOA rules state that the property may only be used for "Single Family Residential Purposes" and the couple asserts that short term rentals are a single family residential use since they rent to single families.
(3) A case in Washington, Wilkinson V. Chiwawa COmmunities Association, which held that vacation rentals are a residental and not a commercial use of property.
(4) A case in Idaho in which property owners won in court after their community association tried to prohibit them from doing short term rentals. Pinehaven Community Board v Brooks. Again the court affirmed that renting out property on a short term basis is a residential and not a commerical use of property.
(5) A case in California, Watson Vs Oak Shores Community Association, in which the property owners sued the HOA over rules that banned them from doing Short term rentals and/or imposed higher fees for such. THey lost.
(6) In a Nashville TN case not yet resolved, a couple is suing over what they feel are unfair restrictions (only a certain # of property owners in the area can get short term rental permits) on short term rentals.
(7) A group of short term rental hosts in Ashville, NC are suing the city re its ban on short term rentals.
(8) A city in Wisconsin was prohibited from discriminating against short term rentals
From #1:
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Keith shared Oct 12 2015
Colorado Says: "Short Terms Rentals may not be Commercial Use of Property"
Colorado court of appeals ruled, in a case of HoA Vs. Homeowner, that
A blog article summarizing the decision is on the co hoa law blog:
www.cohoalaw.com/399742-print.html
OOPS that one seems to have been removed, try here: caselaw.findlaw.com/co-court-of-appeals/1710512.html
AND: www.courtlistener.com/html/2015/08/13/houston_v._wilson_mesa_ranch_homeowners_association_inc.html
In a recent decision [Houston v. Wilson Mesa Ranch Homeowners Association, Inc., 2015 WL 4760331 (D. Colo. August 13, 2015], the Colorado Court of
Appeals held that an association’s covenants stating that homes could
not be occupied or used for any commercial or business purpose did not
prohibit a homeowner from renting out his property for short-term
vacation rentals.
A homeowner in the community advertised and rented
his home for rent through the VRBO website. In response to the
homeowner’s actions, the association passed an amendment to its
‘administrative procedures’ prohibiting its members from renting out
their properties for a period of less than thirty days without prior
board approval and establishing a $500 fine for violations.
The Court found that a short-term rental constitutes a residential
and not commercial use of the property and found in favor of the
homeowner. However, had the covenants contained a specific prohibition
against short term rentals, it may have reached an opposite conclusion.
Additionally, the Court found that the ‘administrative procedure’
adopted by the association was improper as it was contrary to the terms
of the covenants. In other words, since the covenants did not prohibit
short term rentals, the association could not restrict rentals absent a
homeowner approved amendment to the covenants.
This case illustrates how caution needs to be
utilized before an association attempt to interpret its covenants too
broadly. The dispute could have been avoided had the covenants
specifically prohibited short term rentals.
Colorado Appeals Court full ruling: www.courtlistener.com/html/2015/08/13/houston_v._wilson_mesa_ranch_homeowners_association_inc.html
Used to be on this site but seems to have been removed:
www.cobar.org/opinions/opinion.cfm?opinionid=9892
OR bit.ly/1jtV1Fu
My 2 cents:
There are similarities in Colorado and California law. In addition, definitions of terms and words are generally the same throughout the country. This ruling should help HomeSharers in Colorado where their HoA's are trying to restrict their activity sharing their homes.
If these can apply to California, this will help many SF Home Sharers dealing with hostile HoA's.
The most interesting part for me is 'Colorado's determination that "short-term rental constitutes a residential and not commercial use of the property"
Peter
Thanks Keith. Three caveats: 1. Colorado state judgments are at best persuasive and not binding on CA courts. The good news is that this is a Court of Appeals decision, which increases its persuasive potential 2. In addition to restricting this judgment jurisdictionally, opponents to home sharing may also seek to restrict this decision contextually - i.e. only in the context of HOA rules and perhaps only when the terms are substantially the same or even identical. 3. HOAs that are anti-home sharing can just amend their rules to clearly prohibit home sharing. How difficult this will be will depend on the nature of the Association. For example, in a holiday resort area, the HOA is likely to welcome home sharing. Not so much in a gated, retirement community.
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From #2:
Charles shared Jan 15 2016
HOA/short term rental case is going to Texas Supreme Court?
A HOA and short term rental case is going to be petitioned to be heard in the Texas Supreme Court in the next 4-6 weeks. The home owner lost in district court and won in an appeals court. Now the HOA is escalating it to be possibly heard in the TSC. It all has to do with the meaning of residential use in the covenants of the HOA. The Supreme Court could agree with the appeals court and put this gray area to bed once and for all. If they reverse the appeals decision then it could mean the end of short term rentals for people tied to HOAs or restrictions. Thousands of Texas home owners could be affected and other states may try to follow. I'm sure Airbnb has a lobby group that could help us but I don't know who should be made aware of what is going on. I have not heard anything from Airbnb on this so I don't know if they even know. You can search for Zgabay v. NBRC property owners association to read up on this.
See the case here: law.justia.com/cases/texas/third-court-of-appeals/2015/03-14-00660-cv.html
and here: cases.justia.com/texas/third-court-of-appeals/2015-03-14-00660-cv.pdf?ts=1440780819
also here: www.jpatricksuttonlaw.com/resources/zg-brief-complete-FS.pdf
In this case, the Trial Court found in favor of the HOA, and the Appeals court reversed the decision and said that since the HOA rules were ambiguous, the finding should be in favor of the couple since in any case of regulations, the burden of proof is on the regulator. BTW, I fully agree with that!! The case is now heading to the state Supreme Court. THis is interesting. I would guess that the Supreme Court will rule along with the Appeals court, since the reasoning of the Appeals court only makes sense. However, if the HOA really wants to ban short term rentals, I don't see why it doesn't just pass a new rule banning them, rather than spending lots of money arguing that its existing rules banned them!!.
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From #3
www.vrmawa.org/Resources/Documents/VRMAWA_article_wrightnoel.pdf
In its recent opinion in Wilkinson v. Chiwawa Communities Association1
, the Washington Supreme Court ruled that
using a residential property as a short term rental constituted a valid residential use and was not prohibited by restrictive
covenants that generally prohibited use of the property for commercial purposes. The Court went even farther and held that
in most cases an owners’ association cannot amend existing restrictive covenants to prohibit short term rentals.
Chiwawa River Pines (Chiwawa) is a planned residential community located in Chelan County with both permanent and
vacation residents. Originally, it consisted of six phases of development, each with separate covenants, which purported to
establish a general development plan. In 1988, a majority of the association’s members voted to consolidate all six covenants
into a single set of covenants governing all lots within the community. The covenants retained much of the original
restrictions, including fairly specific restrictions on how lots could be used, building restrictions, and signage restrictions,
to name a few. The lots could only be used as single family residences and could not be used for commercial purposes. The
covenants were silent as to rentals other than restricting the size and location of signage on lots advertising the lots for rent.
In addition, the covenants also included a clause that allowed the restrictions in the covenants to be changed by a majority
vote of the members.
For decades homes within Chiwawa were rented as vacation rentals. As the number of rentals increased, a majority of the
lot owners become concerned. In 2008, based on a majority vote of membership, the association banned all vacation rentals. This prohibition was challenged in court and eventually struck down. In response, a majority of members voted to amend the covenants to prohibit rentals of less than one month or 30 continuous days. Members using their homes as vacation
rentals challenged the amendment. The trail court struck down the amendment as improper, and this ruling was upheld by
the Washington Supreme Court in Wilkinson v. Chiwawa Communities Association.
Chiwawa defended the amendment on two grounds both of which were rejected by the Supreme Court. First, Chiwawa
argued that using homes as vacation rentals constituted a commercial activity that was expressly prohibited by the
covenants. In reviewing the covenants the Supreme Court noted that a Court’s job was to implement the intent of the
drafters of the original covenants, and that any interpretation should protect the members’ collective interests. Based on
the lack of any express prohibition against rentals, the Supreme Court held that the drafters intended that homes could be
rented. Repeatedly referencing Ross v. Bennett2
, the Court held that rentals, no matter how long the term, are a residential
use because the renter uses the home for the same purpose as an owner—for “eating, sleeping, and other residential
purposes.” The Court specifically rejected the assertion that the receipt of income detracted or changed the residential
characteristics of the rental use by the tenant. It also rejected the assertion that the payment of business and occupation taxes
1
2014 WL 1509945 (2014).
2
148 Wn. App. 40 (2009).
Detracted from the residential character of the rental use.
Second, and of potentially greater impact to vacation rental owners, the Court rejected Chiwawa’s assertion that it was
entitled to amend the restrictive covenants based on a majority vote of the lot property owners. Considering the language of the
covenants, the Court held that when the language allows the members to change covenants by a majority vote, that language
does not allow the members to create new covenants.3
Since the Court read the covenants to allow rentals, the amendment
passed by a majority vote prohibiting vacation rentals was a new covenant, not a change to an existing covenant. As a result,
the Court stated that the only way a rental restriction could be implemented, since it constituted a new restriction and not
merely a change to an existing use, was by a unanimous vote of all members.
While the Chiwawa case is strong support for those who want to use their homes as vacation rentals within planned
communities where restrictive covenants limit property uses. The case should not be read too broadly. The Court specifically
stated that vacation rental restrictions could be implemented through restrictive covenants if those covenants were properly
adopted. The language of the ruling would also allow an association to amend their covenants to limit uses as vacation
rentals, if the covenants already restricted rental activity and included a clause allowing the members to change existing
covenants by a majority vote. As a result, we strongly recommend that prior to buying any residential property you may at
some time consider using as a vacation rental, you have counsel familiar with the issues review the restrictive covenants prior to your purchase.
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From #4
caselaw.findlaw.com/id-supreme-court/1160015.html
In May 2000, the Brooks purchased residential property with a single-family dwelling in Island Park, Idaho. This property is located in the Pinehaven Subdivision and subject to the Pinehaven Covenants. The Pinehaven Covenants apply to all properties within the Pinehaven Subdivision, run with the land, and are binding on all subsequent purchasers. The Respondent, Pinehaven Planning Board (“Pinehaven”), part of the homeowner's association for the Pinehaven Subdivision, is authorized to enforce the Covenants. In addition to the Covenants, property within the Pinehaven subdivision is also subject to certain ordinances (“Ordinances”) governing activities within the subdivision. Both the Covenants and Ordinances are intended to protect the residential nature of the Pinehaven Subdivision and the mutual enjoyment of the residential property.
The central issue in this case is whether the Covenants prohibit the short-term rental of residential property. Three Covenants speak to the issue. The first, Section 10, provides “[n]o commercial or industrial ventures or business of any type may be maintained or constructed” upon any residential lot. The second, Section 12, further provides “no more than one (1) single family dwelling may be constructed” upon any residential lot. A third Covenant, Section 27, provides for interpreting the meaning of certain terms in the document: “The Uniform Building Code shall be used to define any term not defined herein.” Further, if a term is used that is not defined in the Covenants or the Uniform Building Code, “Webster's Dictionary shall be the source used for definition of terms.”
In the summer of 2000, the Brooks listed the subject property with a local real estate agent, Rainbow Realty, as a daily or weekly vacation rental.
This Court determines, as a matter of law, the Covenants are unambiguous and clearly allow the rental of residential property for profit. Further, even if this Court determined the Covenants were ambiguous, the ambiguity would still be resolved in the Brooks' favor.
Section 10 of the Covenants further states:
No commercial or industrial ventures or business of any type may be maintained or constructed upon any lot, except on the property ․ which ․ has been designated as “commercial property” by the previously adopted and recorded Protective Covenants or Subdivision plats.
Renting the property for residential purposes, whether short or long-term, does not fit within these prohibitions. The only building on the Brooks' property remains a single-family dwelling and renting this dwelling to people who use it for the purposes of eating, sleeping, and other residential purposes does not violate the prohibition on commercial and business activity as such terms are commonly understood.
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From #5
See info here:
www.hoaleader.com/public/California-Court-OKs-ShortTerm-Rental-Restrictions-Related-Fees.cfm
The debate over owners' posting their units on short-term rental sites like Airbnb and HomeAway should again heat up. That's because a California appellate court has held that HOAs can restrict owners' rights on this front. Here we explain the decision and its implications, plus we share insight on how this issue continues to evolve across the country.
Here's What the Court Decided
The case is Watson v. Oak Shores Community Association, and the court issued a decision March 2015. Oak Shores is a community in Bradley, Calif., with 851 lots, of which 660 lots have single-family homes built on them, according to the court's opinion. About 20 percent of the homes are occupied by full-time residents, and about 66 absentee owners rent their home to short-term vacation renters.
The case arose when several owners—the Wattses and the Burlisons—challenged rules and fees imposed by the association, including a minimum rental period of seven days and an annual fee of $325 on owners who rent out their homes. The HOA also imposed a mandatory garbage collection fee; boat and watercraft fees; building permit fees; and property transfer fees. The number of cars, boats, and other watercraft renters are permitted to bring on the property were also restricted.
SEe the case here: www.courts.ca.gov/opinions/nonpub/B240337.PDF
A note and a warning to would be litigators from this lawsuit: the property owners who sued the HOA to try to challenge its rules, (and who only owed a few thousand dollars in fees to the HOA) ended up owing over $1 million to the HOA for litigation expenses in this court judgement. WHich just goes to show that if you sue someone in court and lose, you could lose BIGGG!!
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From #6
See here: nashvillepublicradio.org/post/disgruntled-nashville-family-challenges-new-airbnb-regulations-court#stream/0
A Nashville ordinance regulating short-term rentals, is facing its first legal challenge. The lawsuit, filed by the Beacon Center of Tennessee, is focusing on one provision that makes it harder for property owners to rent out their homes full-time.
P.J. and Rachel Anderson have occasionally rented out their Germantown home on Airbnb to help pay off their mortgage, but Nashville has a cap on the number of rentals when the owner doesn't live there full-time — 3 percent of properties per census tract are allowed to be "non-owner-occupied short-term rentals."
The Andersons applied for a short-term rental permit. They were denied. Rachel says that hurts their financial future.
“It seems kind of silly in the short term," she says. "But if you look at it in the long term and crunch the numbers, it’s like, 'Wow, that is really unfair.' "
When asked why they didn't rent out their house conventionally instead, they said they wanted to be able to return to Nashville and use their house occasionally.
The Beacon Center, which is best known for publishing the annual "Pork Report," a list of alleged fraud and abuse in government, is representing the couple. This is its first-ever lawsuit. President Justin Owen says it decided to take up the case because it deals with issues at the core of the group's free market principles.
"Economic liberty, property rights — those are the types of cases we wanted to help Tennesseans with," Owen says.
In the case, the group argues the rental cap is unconstitutional because it gives some people the ability to rent out their homes, but not others.
Nashville passed a whole set of regulations on Airbnbs earlier this year. At the time, the cap was seen as a compromise between Airbnb advocates and neighborhood groups that wanted to limit the number of short-term renters.
SEe more info here:
www.beacontn.org/andersons/
Case documents:
www.beacontn.org/wp-content/uploads/2015/12/complaint-SIGNED.pdf
www.beacontn.org/wp-content/uploads/2015/12/motion-for-injunction-signed.pdf
www.beacontn.org/wp-content/uploads/2015/12/response-to-motion-to-dismiss-II.pdf
www.beacontn.org/wp-content/uploads/2015/12/response-to-motion-to-dismiss-II.pdf
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From #7
mountainx.com/news/short-term-rental-operators-join-forces-file-lawsuit/
Rebecca Robertson is a long-time Asheville artist, a wife, an owner of short- and long-term rental property — and now, a plaintiff in a lawsuit taking on Asheville’s prohibition of short-term rentals.
“After leaving the art show circuit, I have been able to make a living by creating a vacation rental near downtown,” explains Robertson. She bought a dilapidated property on Spears Avenue in 2013. “It was a teardown,” she recalls, describing the extensive renovation project which resulted in two separate units. Robertson uses the first-floor unit as a short-term rental she calls “The Bluebird of Happiness” in online listings, while the upstairs unit is rented to a long-term tenant.
When she brought the property, Robertson’s realtor urged her to seek out a property which would lend itself to a short-term rental use. “The feeling was that everybody does it. If you get caught, it’s a $100 fine, but the enforcement process is complaint driven. If your neighbors are happy, you are not going to have a problem,” Robertson says she was told.
An anonymous complaint
On October 16, Robertson and about 30 other short-term rental operators received notices of violation from the city. The notices gave the operators 30 days to cease renting their properties to short-term guests. The action stemmed from a city investigation of 40 alleged violations submitted by a single anonymous source as links to internet vacation rental listings in Asheville.
In August, city council increased the fine for violations of the short-term rental prohibition to $500 per night and finalized plans to hire a city staff member dedicated to enforcing existing city regulations on short-term rentals. Shannon Morgan, who has been with the city in various positions for 15 years, took up the new staff position last week.
Upon receiving notice that she must cease operating her property as a short-term rental within 30 days or face steep daily fines, Robertson felt as though the ground underneath her feet had shifted: “I don’t know what I’m going to do. The city has taken my income away from me.”
Coming together
Robertson and a group of fellow short-term rental operators have banded together to form ASTRA, the Asheville Short-Term Rental Association. The group aims to serve as a resource for property owners and as a voice for their concerns. ASTRA’s group Facebook page has attracted 417 likes in the two months it’s been online. Posts on the page include links to articles challenging arguments advanced by those short-term rental opponents, letters from satisfied short-term rental customers and the results of a small survey of previous short-term rental guests in Asheville.
Some ASTRA members, including Robertson, have taken their activism a step further by working with local attorney Derek Allen of Ward and Smith, P. A. to challenge the legality of the city’s short-term rental regulations. On Wednesday, Oct. 28, Allen filed a civil action against the city on behalf of Robertson, her husband Wann Near and Christal Weatherly of Asheville.
In the complaint, Allen advances five separate legal arguments in support of the plaintiffs’ claim that the city’s prohibition against short-term rentals is invalid. In one argument, the case claims that Chapter 42a of North Carolina state law, the Vacation Rental Act, provides rules for vacation rentals which allow for short-term rentals. The case asserts that the state law preempts any local law, including Asheville’s Unified Development Ordinance.
Allen commented that Asheville’s short-term rental operators are not the first group of owners to challenge local prohibitions on vacation rentals. And he stressed that his clients and other short-term operators may find relief through means other than a lawsuit.
“We suggested some different alternatives to city council and the planning department years ago,” said Allen. “We favor a special use or conditional use permit process, whereby the city can tailor its approval to each specific property. That kind of process can consider a list of factors, including the proximity to downtown, the presence of other units, transportation issues and others.”
“I can’t imagine anything more Asheville than sharing your home with guests from out of town. This is an awesome alternative to have in Asheville,” Allen concluded.
Official response
City Attorney Robin Currin responded to inquiries via an email: “I did receive this Complaint, but have not had time to review closely or analyze, so it would be premature to discuss at this time. We will be filing an Answer in the next several months, and that document will set out the City’s position. I am glad to share that with you when it is prepared and filed.”
Mayor Esther Manheimer was not immediately available to comment on the lawsuit.
Councilman Cecil Bothwell said, “This was to be expected. A rash decision by members of city council has plunged us into another unnecessary lawsuit. Many STR owners have been operating for years with city staff assurance that all would fine as long as there were no complaints. We have permitted people to make substantial investments based on that enforcement policy, and they very reasonably feel defrauded. I’m sorry this will have to be settled in court, since there are much better ways to handle short-term rentals as we have seen in many other cities.”
My two cents: I like this -- in my opinion, it serves cities right to be sued when they try to limit property owner's rights through unreasonable prohibitions of short term rentals. In my opinion no city should be permitted to ban short term rentals in residential areas, since STRs are a residential use of property.
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From #8
www.apg-wi.com/sawyer_county_record/news/local/city-cannot-discriminate-against-short-term-rentals/article_36e81b90-8d7f-11e5-a682-2bbd6ec56a8e.html
The decision is based on a case in which the District 2 Court of Appeals found that the City of Cedarburg (in Wisconsin) could not prevent a home from being used for short-term rentals because the city did not distinguish in its ordinance the difference between short-term and long-term rentals.
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Here is a statement from J. Patrick Sutton, the attorney representing the Texas Couple against the HOA in case 2 above: (see his site here: www.jpatricksuttonlaw.com/ ). He indicates that there are several such cases in Texas and the Trial Courts of TExas seem biased in favor of the HOA's, yet he is appealing their decisions up higher. Hope he wins them all!!
Thank you J.Patrick Sutton for your work on behalf of property owners in Texas!!
HOT TOPIC OF 2015: SHORT-TERM RENTAL LITIGATION
TEXAS SUPREME COURT CHALLENGE TO HOMEOWNER WIN ON APPEAL IN ZGABAY V. RIVER CHASE PROPERTY OWNERS ASSOCIATION :
In this important case, the Texas Third Court of Appeals in Austin held on August 28, 2015, that the “residential use” requirement in most deed restrictions DOES NOT BAN SHORT-TERM RENTALS. The key reason why is that absent clear limitations on lease duration, the traditional rule of construing restrictive covenants to favor the free use of land controls. That is a vital rule for property owners subject to the whims of HOA boards. The case is Zgabay v. NBRC Property Owners Assoc., No. 03-14-00660 (Tex. App. — Austin August 28, 2015).
On October 27, 2015, the HOA filed a petition for review asking the Texas Supreme Court to take up the case and reverse the court of appeals. We filed our response on December 16, 2015, and the HOA’s reply goes in January 14, 2016.
Check back here for updates.
Loss for homeowner at the trial court level in TARR V. TIMBERWOOD PARK OWNERS ASSOCIATION (BEXAR COUNTY):
The HOA, assuming the role of enforcer of the deed restrictions and fined Mr. Tarr for renting out his home for short terms, asserted that the deed restrictions ban short-term rentals. Mr. Tarr sued to block the enforcement action and the fines and asked the court to declare the meaning of the restrictive covenants. Despite the homeowner victory in Zgabay, reported above and involving similar facts, the County Court at Law in Bexar County granted summary judgment to the HOA in an order almost identical to that reversed by the Austin Court of Appeals. An appeal has been filed in the San Antonio Court of Appeals.
Other cases
I presently have multiple other essentially identical STR cases pending in trial courts in the appellate districts of Austin and San Antonio. They all boil down to whether bare “residential use only” wording, without more, bars short-term rentals. For whatever reason, HOA’s and those opposed to STR’s don’t accept the Zgabay decision and appear willing to continue refusing to amend deed restrictions and instead litigate their existing deed restrictions. As I have pointed out in briefs, if “residential use” wording has all along banned STR’s, then homeowners all over Texas have been violating the deed restrictions for decades without knowing it. I have considerable difficulty believing that the appellate courts will allow such a result when nothing in bare “residential use” wording gives fair notice that a duration limit applies to leasing."
(1) A Case in Colorado, Houston V. Wilson MEsa Ranch HOA, where a court affirmed that short term rentals are not a commerical use of property but a residential use.
(2) A case in Texas, Zagray V. NBRC, about whether a couple has the right to do short term rentals -- the HOA rules state that the property may only be used for "Single Family Residential Purposes" and the couple asserts that short term rentals are a single family residential use since they rent to single families.
(3) A case in Washington, Wilkinson V. Chiwawa COmmunities Association, which held that vacation rentals are a residental and not a commercial use of property.
(4) A case in Idaho in which property owners won in court after their community association tried to prohibit them from doing short term rentals. Pinehaven Community Board v Brooks. Again the court affirmed that renting out property on a short term basis is a residential and not a commerical use of property.
(5) A case in California, Watson Vs Oak Shores Community Association, in which the property owners sued the HOA over rules that banned them from doing Short term rentals and/or imposed higher fees for such. THey lost.
(6) In a Nashville TN case not yet resolved, a couple is suing over what they feel are unfair restrictions (only a certain # of property owners in the area can get short term rental permits) on short term rentals.
(7) A group of short term rental hosts in Ashville, NC are suing the city re its ban on short term rentals.
(8) A city in Wisconsin was prohibited from discriminating against short term rentals
From #1:
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Keith shared Oct 12 2015
Colorado Says: "Short Terms Rentals may not be Commercial Use of Property"
Colorado court of appeals ruled, in a case of HoA Vs. Homeowner, that
A blog article summarizing the decision is on the co hoa law blog:
www.cohoalaw.com/399742-print.html
OOPS that one seems to have been removed, try here: caselaw.findlaw.com/co-court-of-appeals/1710512.html
AND: www.courtlistener.com/html/2015/08/13/houston_v._wilson_mesa_ranch_homeowners_association_inc.html
In a recent decision [Houston v. Wilson Mesa Ranch Homeowners Association, Inc., 2015 WL 4760331 (D. Colo. August 13, 2015], the Colorado Court of
Appeals held that an association’s covenants stating that homes could
not be occupied or used for any commercial or business purpose did not
prohibit a homeowner from renting out his property for short-term
vacation rentals.
A homeowner in the community advertised and rented
his home for rent through the VRBO website. In response to the
homeowner’s actions, the association passed an amendment to its
‘administrative procedures’ prohibiting its members from renting out
their properties for a period of less than thirty days without prior
board approval and establishing a $500 fine for violations.
The Court found that a short-term rental constitutes a residential
and not commercial use of the property and found in favor of the
homeowner. However, had the covenants contained a specific prohibition
against short term rentals, it may have reached an opposite conclusion.
Additionally, the Court found that the ‘administrative procedure’
adopted by the association was improper as it was contrary to the terms
of the covenants. In other words, since the covenants did not prohibit
short term rentals, the association could not restrict rentals absent a
homeowner approved amendment to the covenants.
This case illustrates how caution needs to be
utilized before an association attempt to interpret its covenants too
broadly. The dispute could have been avoided had the covenants
specifically prohibited short term rentals.
Colorado Appeals Court full ruling: www.courtlistener.com/html/2015/08/13/houston_v._wilson_mesa_ranch_homeowners_association_inc.html
Used to be on this site but seems to have been removed:
www.cobar.org/opinions/opinion.cfm?opinionid=9892
OR bit.ly/1jtV1Fu
My 2 cents:
There are similarities in Colorado and California law. In addition, definitions of terms and words are generally the same throughout the country. This ruling should help HomeSharers in Colorado where their HoA's are trying to restrict their activity sharing their homes.
If these can apply to California, this will help many SF Home Sharers dealing with hostile HoA's.
The most interesting part for me is 'Colorado's determination that "short-term rental constitutes a residential and not commercial use of the property"
Peter
Thanks Keith. Three caveats: 1. Colorado state judgments are at best persuasive and not binding on CA courts. The good news is that this is a Court of Appeals decision, which increases its persuasive potential 2. In addition to restricting this judgment jurisdictionally, opponents to home sharing may also seek to restrict this decision contextually - i.e. only in the context of HOA rules and perhaps only when the terms are substantially the same or even identical. 3. HOAs that are anti-home sharing can just amend their rules to clearly prohibit home sharing. How difficult this will be will depend on the nature of the Association. For example, in a holiday resort area, the HOA is likely to welcome home sharing. Not so much in a gated, retirement community.
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From #2:
Charles shared Jan 15 2016
HOA/short term rental case is going to Texas Supreme Court?
A HOA and short term rental case is going to be petitioned to be heard in the Texas Supreme Court in the next 4-6 weeks. The home owner lost in district court and won in an appeals court. Now the HOA is escalating it to be possibly heard in the TSC. It all has to do with the meaning of residential use in the covenants of the HOA. The Supreme Court could agree with the appeals court and put this gray area to bed once and for all. If they reverse the appeals decision then it could mean the end of short term rentals for people tied to HOAs or restrictions. Thousands of Texas home owners could be affected and other states may try to follow. I'm sure Airbnb has a lobby group that could help us but I don't know who should be made aware of what is going on. I have not heard anything from Airbnb on this so I don't know if they even know. You can search for Zgabay v. NBRC property owners association to read up on this.
See the case here: law.justia.com/cases/texas/third-court-of-appeals/2015/03-14-00660-cv.html
and here: cases.justia.com/texas/third-court-of-appeals/2015-03-14-00660-cv.pdf?ts=1440780819
also here: www.jpatricksuttonlaw.com/resources/zg-brief-complete-FS.pdf
In this case, the Trial Court found in favor of the HOA, and the Appeals court reversed the decision and said that since the HOA rules were ambiguous, the finding should be in favor of the couple since in any case of regulations, the burden of proof is on the regulator. BTW, I fully agree with that!! The case is now heading to the state Supreme Court. THis is interesting. I would guess that the Supreme Court will rule along with the Appeals court, since the reasoning of the Appeals court only makes sense. However, if the HOA really wants to ban short term rentals, I don't see why it doesn't just pass a new rule banning them, rather than spending lots of money arguing that its existing rules banned them!!.
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From #3
www.vrmawa.org/Resources/Documents/VRMAWA_article_wrightnoel.pdf
In its recent opinion in Wilkinson v. Chiwawa Communities Association1
, the Washington Supreme Court ruled that
using a residential property as a short term rental constituted a valid residential use and was not prohibited by restrictive
covenants that generally prohibited use of the property for commercial purposes. The Court went even farther and held that
in most cases an owners’ association cannot amend existing restrictive covenants to prohibit short term rentals.
Chiwawa River Pines (Chiwawa) is a planned residential community located in Chelan County with both permanent and
vacation residents. Originally, it consisted of six phases of development, each with separate covenants, which purported to
establish a general development plan. In 1988, a majority of the association’s members voted to consolidate all six covenants
into a single set of covenants governing all lots within the community. The covenants retained much of the original
restrictions, including fairly specific restrictions on how lots could be used, building restrictions, and signage restrictions,
to name a few. The lots could only be used as single family residences and could not be used for commercial purposes. The
covenants were silent as to rentals other than restricting the size and location of signage on lots advertising the lots for rent.
In addition, the covenants also included a clause that allowed the restrictions in the covenants to be changed by a majority
vote of the members.
For decades homes within Chiwawa were rented as vacation rentals. As the number of rentals increased, a majority of the
lot owners become concerned. In 2008, based on a majority vote of membership, the association banned all vacation rentals. This prohibition was challenged in court and eventually struck down. In response, a majority of members voted to amend the covenants to prohibit rentals of less than one month or 30 continuous days. Members using their homes as vacation
rentals challenged the amendment. The trail court struck down the amendment as improper, and this ruling was upheld by
the Washington Supreme Court in Wilkinson v. Chiwawa Communities Association.
Chiwawa defended the amendment on two grounds both of which were rejected by the Supreme Court. First, Chiwawa
argued that using homes as vacation rentals constituted a commercial activity that was expressly prohibited by the
covenants. In reviewing the covenants the Supreme Court noted that a Court’s job was to implement the intent of the
drafters of the original covenants, and that any interpretation should protect the members’ collective interests. Based on
the lack of any express prohibition against rentals, the Supreme Court held that the drafters intended that homes could be
rented. Repeatedly referencing Ross v. Bennett2
, the Court held that rentals, no matter how long the term, are a residential
use because the renter uses the home for the same purpose as an owner—for “eating, sleeping, and other residential
purposes.” The Court specifically rejected the assertion that the receipt of income detracted or changed the residential
characteristics of the rental use by the tenant. It also rejected the assertion that the payment of business and occupation taxes
1
2014 WL 1509945 (2014).
2
148 Wn. App. 40 (2009).
Detracted from the residential character of the rental use.
Second, and of potentially greater impact to vacation rental owners, the Court rejected Chiwawa’s assertion that it was
entitled to amend the restrictive covenants based on a majority vote of the lot property owners. Considering the language of the
covenants, the Court held that when the language allows the members to change covenants by a majority vote, that language
does not allow the members to create new covenants.3
Since the Court read the covenants to allow rentals, the amendment
passed by a majority vote prohibiting vacation rentals was a new covenant, not a change to an existing covenant. As a result,
the Court stated that the only way a rental restriction could be implemented, since it constituted a new restriction and not
merely a change to an existing use, was by a unanimous vote of all members.
While the Chiwawa case is strong support for those who want to use their homes as vacation rentals within planned
communities where restrictive covenants limit property uses. The case should not be read too broadly. The Court specifically
stated that vacation rental restrictions could be implemented through restrictive covenants if those covenants were properly
adopted. The language of the ruling would also allow an association to amend their covenants to limit uses as vacation
rentals, if the covenants already restricted rental activity and included a clause allowing the members to change existing
covenants by a majority vote. As a result, we strongly recommend that prior to buying any residential property you may at
some time consider using as a vacation rental, you have counsel familiar with the issues review the restrictive covenants prior to your purchase.
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From #4
caselaw.findlaw.com/id-supreme-court/1160015.html
In May 2000, the Brooks purchased residential property with a single-family dwelling in Island Park, Idaho. This property is located in the Pinehaven Subdivision and subject to the Pinehaven Covenants. The Pinehaven Covenants apply to all properties within the Pinehaven Subdivision, run with the land, and are binding on all subsequent purchasers. The Respondent, Pinehaven Planning Board (“Pinehaven”), part of the homeowner's association for the Pinehaven Subdivision, is authorized to enforce the Covenants. In addition to the Covenants, property within the Pinehaven subdivision is also subject to certain ordinances (“Ordinances”) governing activities within the subdivision. Both the Covenants and Ordinances are intended to protect the residential nature of the Pinehaven Subdivision and the mutual enjoyment of the residential property.
The central issue in this case is whether the Covenants prohibit the short-term rental of residential property. Three Covenants speak to the issue. The first, Section 10, provides “[n]o commercial or industrial ventures or business of any type may be maintained or constructed” upon any residential lot. The second, Section 12, further provides “no more than one (1) single family dwelling may be constructed” upon any residential lot. A third Covenant, Section 27, provides for interpreting the meaning of certain terms in the document: “The Uniform Building Code shall be used to define any term not defined herein.” Further, if a term is used that is not defined in the Covenants or the Uniform Building Code, “Webster's Dictionary shall be the source used for definition of terms.”
In the summer of 2000, the Brooks listed the subject property with a local real estate agent, Rainbow Realty, as a daily or weekly vacation rental.
This Court determines, as a matter of law, the Covenants are unambiguous and clearly allow the rental of residential property for profit. Further, even if this Court determined the Covenants were ambiguous, the ambiguity would still be resolved in the Brooks' favor.
Section 10 of the Covenants further states:
No commercial or industrial ventures or business of any type may be maintained or constructed upon any lot, except on the property ․ which ․ has been designated as “commercial property” by the previously adopted and recorded Protective Covenants or Subdivision plats.
Renting the property for residential purposes, whether short or long-term, does not fit within these prohibitions. The only building on the Brooks' property remains a single-family dwelling and renting this dwelling to people who use it for the purposes of eating, sleeping, and other residential purposes does not violate the prohibition on commercial and business activity as such terms are commonly understood.
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From #5
See info here:
www.hoaleader.com/public/California-Court-OKs-ShortTerm-Rental-Restrictions-Related-Fees.cfm
The debate over owners' posting their units on short-term rental sites like Airbnb and HomeAway should again heat up. That's because a California appellate court has held that HOAs can restrict owners' rights on this front. Here we explain the decision and its implications, plus we share insight on how this issue continues to evolve across the country.
Here's What the Court Decided
The case is Watson v. Oak Shores Community Association, and the court issued a decision March 2015. Oak Shores is a community in Bradley, Calif., with 851 lots, of which 660 lots have single-family homes built on them, according to the court's opinion. About 20 percent of the homes are occupied by full-time residents, and about 66 absentee owners rent their home to short-term vacation renters.
The case arose when several owners—the Wattses and the Burlisons—challenged rules and fees imposed by the association, including a minimum rental period of seven days and an annual fee of $325 on owners who rent out their homes. The HOA also imposed a mandatory garbage collection fee; boat and watercraft fees; building permit fees; and property transfer fees. The number of cars, boats, and other watercraft renters are permitted to bring on the property were also restricted.
SEe the case here: www.courts.ca.gov/opinions/nonpub/B240337.PDF
A note and a warning to would be litigators from this lawsuit: the property owners who sued the HOA to try to challenge its rules, (and who only owed a few thousand dollars in fees to the HOA) ended up owing over $1 million to the HOA for litigation expenses in this court judgement. WHich just goes to show that if you sue someone in court and lose, you could lose BIGGG!!
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From #6
See here: nashvillepublicradio.org/post/disgruntled-nashville-family-challenges-new-airbnb-regulations-court#stream/0
A Nashville ordinance regulating short-term rentals, is facing its first legal challenge. The lawsuit, filed by the Beacon Center of Tennessee, is focusing on one provision that makes it harder for property owners to rent out their homes full-time.
P.J. and Rachel Anderson have occasionally rented out their Germantown home on Airbnb to help pay off their mortgage, but Nashville has a cap on the number of rentals when the owner doesn't live there full-time — 3 percent of properties per census tract are allowed to be "non-owner-occupied short-term rentals."
The Andersons applied for a short-term rental permit. They were denied. Rachel says that hurts their financial future.
“It seems kind of silly in the short term," she says. "But if you look at it in the long term and crunch the numbers, it’s like, 'Wow, that is really unfair.' "
When asked why they didn't rent out their house conventionally instead, they said they wanted to be able to return to Nashville and use their house occasionally.
The Beacon Center, which is best known for publishing the annual "Pork Report," a list of alleged fraud and abuse in government, is representing the couple. This is its first-ever lawsuit. President Justin Owen says it decided to take up the case because it deals with issues at the core of the group's free market principles.
"Economic liberty, property rights — those are the types of cases we wanted to help Tennesseans with," Owen says.
In the case, the group argues the rental cap is unconstitutional because it gives some people the ability to rent out their homes, but not others.
Nashville passed a whole set of regulations on Airbnbs earlier this year. At the time, the cap was seen as a compromise between Airbnb advocates and neighborhood groups that wanted to limit the number of short-term renters.
SEe more info here:
www.beacontn.org/andersons/
Case documents:
www.beacontn.org/wp-content/uploads/2015/12/complaint-SIGNED.pdf
www.beacontn.org/wp-content/uploads/2015/12/motion-for-injunction-signed.pdf
www.beacontn.org/wp-content/uploads/2015/12/response-to-motion-to-dismiss-II.pdf
www.beacontn.org/wp-content/uploads/2015/12/response-to-motion-to-dismiss-II.pdf
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From #7
mountainx.com/news/short-term-rental-operators-join-forces-file-lawsuit/
Rebecca Robertson is a long-time Asheville artist, a wife, an owner of short- and long-term rental property — and now, a plaintiff in a lawsuit taking on Asheville’s prohibition of short-term rentals.
“After leaving the art show circuit, I have been able to make a living by creating a vacation rental near downtown,” explains Robertson. She bought a dilapidated property on Spears Avenue in 2013. “It was a teardown,” she recalls, describing the extensive renovation project which resulted in two separate units. Robertson uses the first-floor unit as a short-term rental she calls “The Bluebird of Happiness” in online listings, while the upstairs unit is rented to a long-term tenant.
When she brought the property, Robertson’s realtor urged her to seek out a property which would lend itself to a short-term rental use. “The feeling was that everybody does it. If you get caught, it’s a $100 fine, but the enforcement process is complaint driven. If your neighbors are happy, you are not going to have a problem,” Robertson says she was told.
An anonymous complaint
On October 16, Robertson and about 30 other short-term rental operators received notices of violation from the city. The notices gave the operators 30 days to cease renting their properties to short-term guests. The action stemmed from a city investigation of 40 alleged violations submitted by a single anonymous source as links to internet vacation rental listings in Asheville.
In August, city council increased the fine for violations of the short-term rental prohibition to $500 per night and finalized plans to hire a city staff member dedicated to enforcing existing city regulations on short-term rentals. Shannon Morgan, who has been with the city in various positions for 15 years, took up the new staff position last week.
Upon receiving notice that she must cease operating her property as a short-term rental within 30 days or face steep daily fines, Robertson felt as though the ground underneath her feet had shifted: “I don’t know what I’m going to do. The city has taken my income away from me.”
Coming together
Robertson and a group of fellow short-term rental operators have banded together to form ASTRA, the Asheville Short-Term Rental Association. The group aims to serve as a resource for property owners and as a voice for their concerns. ASTRA’s group Facebook page has attracted 417 likes in the two months it’s been online. Posts on the page include links to articles challenging arguments advanced by those short-term rental opponents, letters from satisfied short-term rental customers and the results of a small survey of previous short-term rental guests in Asheville.
Some ASTRA members, including Robertson, have taken their activism a step further by working with local attorney Derek Allen of Ward and Smith, P. A. to challenge the legality of the city’s short-term rental regulations. On Wednesday, Oct. 28, Allen filed a civil action against the city on behalf of Robertson, her husband Wann Near and Christal Weatherly of Asheville.
In the complaint, Allen advances five separate legal arguments in support of the plaintiffs’ claim that the city’s prohibition against short-term rentals is invalid. In one argument, the case claims that Chapter 42a of North Carolina state law, the Vacation Rental Act, provides rules for vacation rentals which allow for short-term rentals. The case asserts that the state law preempts any local law, including Asheville’s Unified Development Ordinance.
Allen commented that Asheville’s short-term rental operators are not the first group of owners to challenge local prohibitions on vacation rentals. And he stressed that his clients and other short-term operators may find relief through means other than a lawsuit.
“We suggested some different alternatives to city council and the planning department years ago,” said Allen. “We favor a special use or conditional use permit process, whereby the city can tailor its approval to each specific property. That kind of process can consider a list of factors, including the proximity to downtown, the presence of other units, transportation issues and others.”
“I can’t imagine anything more Asheville than sharing your home with guests from out of town. This is an awesome alternative to have in Asheville,” Allen concluded.
Official response
City Attorney Robin Currin responded to inquiries via an email: “I did receive this Complaint, but have not had time to review closely or analyze, so it would be premature to discuss at this time. We will be filing an Answer in the next several months, and that document will set out the City’s position. I am glad to share that with you when it is prepared and filed.”
Mayor Esther Manheimer was not immediately available to comment on the lawsuit.
Councilman Cecil Bothwell said, “This was to be expected. A rash decision by members of city council has plunged us into another unnecessary lawsuit. Many STR owners have been operating for years with city staff assurance that all would fine as long as there were no complaints. We have permitted people to make substantial investments based on that enforcement policy, and they very reasonably feel defrauded. I’m sorry this will have to be settled in court, since there are much better ways to handle short-term rentals as we have seen in many other cities.”
My two cents: I like this -- in my opinion, it serves cities right to be sued when they try to limit property owner's rights through unreasonable prohibitions of short term rentals. In my opinion no city should be permitted to ban short term rentals in residential areas, since STRs are a residential use of property.
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From #8
www.apg-wi.com/sawyer_county_record/news/local/city-cannot-discriminate-against-short-term-rentals/article_36e81b90-8d7f-11e5-a682-2bbd6ec56a8e.html
The decision is based on a case in which the District 2 Court of Appeals found that the City of Cedarburg (in Wisconsin) could not prevent a home from being used for short-term rentals because the city did not distinguish in its ordinance the difference between short-term and long-term rentals.
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Here is a statement from J. Patrick Sutton, the attorney representing the Texas Couple against the HOA in case 2 above: (see his site here: www.jpatricksuttonlaw.com/ ). He indicates that there are several such cases in Texas and the Trial Courts of TExas seem biased in favor of the HOA's, yet he is appealing their decisions up higher. Hope he wins them all!!
Thank you J.Patrick Sutton for your work on behalf of property owners in Texas!!HOT TOPIC OF 2015: SHORT-TERM RENTAL LITIGATION
TEXAS SUPREME COURT CHALLENGE TO HOMEOWNER WIN ON APPEAL IN ZGABAY V. RIVER CHASE PROPERTY OWNERS ASSOCIATION :
In this important case, the Texas Third Court of Appeals in Austin held on August 28, 2015, that the “residential use” requirement in most deed restrictions DOES NOT BAN SHORT-TERM RENTALS. The key reason why is that absent clear limitations on lease duration, the traditional rule of construing restrictive covenants to favor the free use of land controls. That is a vital rule for property owners subject to the whims of HOA boards. The case is Zgabay v. NBRC Property Owners Assoc., No. 03-14-00660 (Tex. App. — Austin August 28, 2015).
On October 27, 2015, the HOA filed a petition for review asking the Texas Supreme Court to take up the case and reverse the court of appeals. We filed our response on December 16, 2015, and the HOA’s reply goes in January 14, 2016.
Check back here for updates.
Loss for homeowner at the trial court level in TARR V. TIMBERWOOD PARK OWNERS ASSOCIATION (BEXAR COUNTY):
The HOA, assuming the role of enforcer of the deed restrictions and fined Mr. Tarr for renting out his home for short terms, asserted that the deed restrictions ban short-term rentals. Mr. Tarr sued to block the enforcement action and the fines and asked the court to declare the meaning of the restrictive covenants. Despite the homeowner victory in Zgabay, reported above and involving similar facts, the County Court at Law in Bexar County granted summary judgment to the HOA in an order almost identical to that reversed by the Austin Court of Appeals. An appeal has been filed in the San Antonio Court of Appeals.
Other cases
I presently have multiple other essentially identical STR cases pending in trial courts in the appellate districts of Austin and San Antonio. They all boil down to whether bare “residential use only” wording, without more, bars short-term rentals. For whatever reason, HOA’s and those opposed to STR’s don’t accept the Zgabay decision and appear willing to continue refusing to amend deed restrictions and instead litigate their existing deed restrictions. As I have pointed out in briefs, if “residential use” wording has all along banned STR’s, then homeowners all over Texas have been violating the deed restrictions for decades without knowing it. I have considerable difficulty believing that the appellate courts will allow such a result when nothing in bare “residential use” wording gives fair notice that a duration limit applies to leasing."