Court Says Owner Can Rent Townhome for Short-Terms (Less Than 7 Days)

This case involved a dispute between the owner of a townhome (“Owner”) and its homeowners’ association (“Association”) over Owner’s right to rent its townhome for terms of fewer than seven days.

Association’s covenant re leasing permitted owners to lease their property so long as the lease and the owner’s tenants comply with the covenants and Association’s bylaws. After Owner began entering into short-term leases of its townhome, Association demanded that it cease renting for short-terms. Owner sued Association seeking to enforce the covenant granting it the right to lease its townhome without restrictions. Association filed a counter-claim alleging that Owner was not using the townhome for “residential-use” and further that Owner was creating a nuisance with the short-term rentals. After the suit was commenced, Association adopted rules which forbid rentals that would require an owner to remit state hotel tax, which effectively banned rentals of fewer than thirty days. Owner then amended its lawsuit to seek a declaration that the new rules were unenforceable because they conflicted with Association’s covenant that limited restraints on an owner’s right to lease.

The trial court ruled that the short-term rentals: