Court Bans Short-Term Rentals in HOA Community That Prohibits “Commercial Activity”

This case involved a dispute between the owners of a properties located within a community governed by restrictive covenants that, in part prohibited properties in the community from being used at any time for business, trade, or any other “commercial” purpose, with the exception of normal agricultural use that included the raising of cattle. The Declaration also specified that: (i) dwellings could be used only as private single family residences, and prohibited the apartments or multi-family structures; and (ii) nuisances were expressly prohibited by stating, “No noxious or offensive activity shall be carried on upon any lot, nor shall anything be done thereon which may be or may become an annoyance or nuisance to the neighborhood.”

The defendant is the case operated a home within the community as a short-term rental. The short-term rental was marketed through Airbnb and other internet platforms, with guests staying for as few as five nights. Neighboring property owners sued, claiming the rentals violated the community’s covenants that limited property use to “country residential living” and prohibited “any commercial use whatsoever.” The plaintiffs in the action sought a declaration that the short-term rentals violated the Association’s Declaration and an injunction prohibiting the defendant’s continued use of the property for short-term rentals.

The trial court found: