Court Says a Lease for Any Term Violates Restriction Prohibiting Use of Properties for “Business or Commercial Purposes”

This case involved a dispute between a homeowner (“Owner”) and her homeowners’ association (“Association”) over Owner’s right to lease her house. Association’s restrictive covenants provided that all lots be used “for residential purposes only” and prohibited use of the lots for “business or commercial purposes.”

After living in her residence for 50 years, Owner moved to an assisted living facility and, with assistance from her son and in disregard of Association’s notices that renting her property would be a prohibited “commercial use,” she leased her house for $2,400 per month to offset the expenses relative to the assisted living facility. The lease restricted use to “private residential purposes only.” Association filed suit seeking a declaratory judgment that the restrictions prohibited all property rentals, that Owner’s rental violated the restrictions and must cease. The trial court found that Owner’s rental of the property violated Association’s restriction prohibiting commercial activity and granted summary judgment in favor of Association. Owner appealed.

The appellate court ruled that the use of Owner’s property as a source of income for her living expenses at the assisted living facility transformed her property into: