Homeowner is Ordered to Pay Over $600,000 in Attorney Fees

This case involved a dispute over the right of the owner of a property to rent his house out to vacationers on a short- term basis subject to covenants and restrictions. The plaintiffs in the case, who were the owners of adjacent property, commenced the action against their neighbor who was renting his property out for periods that were typically three to seven days, and their homeowners association (“Association”) for not taking action to prevent the short-term rentals. The Plaintiffs believed that the short-term rentals were in violation of Association’s governing documents.

In their action, the plaintiffs contended that their neighbor’s rental operation violated three different restrictions contained in Association’s Declaration: (1) a provision that restricted use of the subject property to the “purpose” of one single family dwelling unit per lot; (2) a provision that the subject property could be occupied only by a family or, at most, two unrelated persons who lived together as a single household unit; and (3) a provision that prohibits commercial enterprises on the subject property.

With regard to the plaintiff’s claims against Association, the plaintiffs contended that Association had a duty to take action to prevent the short term rentals in violation of the Declaration. The trial court entered judgment in favor of the defendants after finding that the short term rentals did not violate the Declaration and awarded both defendants attorney’s fees. The plaintiffs then filed an appeal.

On review, the appellate court ruled that:

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