By gedlaw50486353, Sep 6 2017 01:47AM
The First District Court of Appeal of Florida (“1st DCA”) recently upheld a lower court judgment ruling that short-term vacation rentals do not violate restrictive covenants requiring that they have a residential purpose.
In this case, the Homeowners (Appellees) owned properties in the Santa Monica Beach subdivision of Bay County. Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord, 219 So. 3d 111, (Fla. 1st DCA, 2017) The properties were subject to a restrictive covenant which provided
that the land “shall be used only for residential purposes” and that no building on the land could be used for a “ business” nor for purposes of “ public assemblage”. Id at 2. The Association sent letters to the Homeowners in December 2015 stating that the property was being used in violation of the restrictive covenants due to the property becoming a vacation rental and being advertised on VRBO. Id. The Association thereby requested that the Homeowners discontinue their “vacation rental business”. Id at 3.
The Association subsequently filed a complaint alleging that the Homeowners’ properties were being offered and advertised for rent as “public lodging establishments”; Homeowners were required to collect and remit state and local taxes on the rentals; and that Homeowners were licensed to operate the property as a public lodging establishment under a business name. Id at 3. The Homeowners argued that the Association failed to allege the properties were being used for any purpose other than residential. They also argued that the residential use of the property was conclusively established by the Association’s reference to the Florida Statute concerning “public lodging” which refers to lodging as an inherently residential use. Id at 4.
The trial court agreed with the Homeowners and dismissed the complaint stating “the critical inquiry is not the duration of the tenancy, but the character and actual use of the property by those residing thereon.” Id. Further, the Court reasoned that since the proper focus is on the actual use of the property, the nature of that use is not changed from residential to commercial merely because the Homeowners earn income from the rental property or because the property is subject to a regulatory scheme and licensure. Id. Lastly, the Court stated that because the restrictive covenants were silent on the use of short-term rentals, any ambiguities regarding the proper use of the property must be resolved in favor of the Homeowners. Id at 5.
The issue of whether short-term vacation rentals of residential properties violate restrictive covenants requiring properties to be used for residential purposes and prohibiting use for business purposes was a case of first impression in Florida. Id. However, this issue has been resolved in a number of other states which have consistently held that short-term vacation rentals do not violate restrictive covenants under similar facts. Id. The 1st DCA, looking at these other cases, determined that the critical issue in such cases is not the duration of the rental but whether the renters of the property are using the property for ordinary living purposes such as eating and sleeping. Id at 6. The Court reasoned that the Association did not and could not allege that the Homeowners’ properties were being used by the renters for any nonresidential purposes and therefore, the Court upheld the ruling of the trial court in favor of the Homeowners. Id at 7.
See Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord, 219 So. 3d 111, (Fla. 1st DCA, 2017). (pf)
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