South Ridge HOA v. Brown — What’s a "Short-Term" Rental?

In an opinion issued about a month ago, the Utah Court of Appeals decided that “a weekly rental is clearly similar to nightly rentals and timeshares, when considering those terms together.”

The case arose from language contained in the South Ridge Homeowners’ Association’s Declaration of Covenants, Conditions and Restrictions (C, C & Rs) that provided, in relevant part, “No timeshare, nightly rental or similar use will be allowed on any single family lot.”  The court thus considered its task to be to determine “whether Brown’s weekly rentals were uses similar to a nightly rental or timeshare.”  The court concluded that “a weekly rental is clearly similar to nightly rentals and timeshares, when considering those terms together.”  In coming to this conclusion, the court focused on the fact that the “common thread” of these short duration rentals is that “people will be coming and going for short periods of time.”

The court ultimately ruled in favor of the association, and surprisingly affirmed the lower court’s broad injunction, despite the fact that the court found “the breadth of the trial court’s injunction more troubling…”  Under the injunction, Ms. Brown was to notify the association of the identity of her visitors and the duration of their visits.  The association’s counsel argued that the requirement of notification was only to apply to those guests who were not accompanied by Ms. Brown, but that was not in the order.  The dissent agreed with the majority’s interpretation of the C, C & Rs, but would have limited the injunction to prospectively prohibit the disputed short-term rentals, without a requirement of advance disclosure of occupancies.

I’m not certain whether I disagree with the court’s ultimate conclusion in this case, although I’m a bit disappointed as to how they got there.  First of all, in order to interpret the contract as a matter of law, they had to find the contract to be unambiguous.  I’m troubled that they quickly disregarded the provisions which allowed an owner to “rent or lease said owner’s residential building from time to time.” Brown’s counsel asserted, and it was apparently not challenged, that the rentals happened “occasionally” and “fewer than six” times a year.   Thus it appears uncontested that the frequency of the rentals was not in violation of the covenants, leaving only their duration of possible violation.  In that regard, the court relied upon the “timeshare” language to expand the prohibition of “nightly” rentals.

What the court appears to have disregarded is that a “timeshare” is a particular type of ownership, and not directly related to rental periods, or even really related to a rental of a unit by its owner.  Timeshares are specifically defined and regulated by an entire chapter of the Utah Code, (Utah Code Ann 57-19), and that a timeshare unit is intended primarily to be owned among a wide variety (presumably 52) groups of owners, whereas Ms. Brown’s rentals were occurring at about 10% of that frequency.  I think it’s a stretch, at best, to conclude “as a matter of law,” that the uses are similar.  The  conflict between the “time to time” language and the “nightly” prohibition seems to have created an ambiguity which, under traditional jurisprudential rules, must be determined by a jury.  See, e.g. Rubey v. Wood, 15 Utah 2d 312     (1964).    

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