With continued disagreement among courts on this question, a trial court in New York has ruled that a covenant limiting property to “single family residential purposes” precludes an owner from renting to short term tenants, effectively preventing use of the property for Airnbnb (and similar) purposes. W. Mountain Assets LLC v. Dobkowski, 2023 WL 2398675 (N.Y. Sup. Ct. 2023).
Courts across the country has disagreed about whether short-term (vacation or business trip) rentals constitute a “residential” or a “commercial” use and whether they are compatible with a “single family” use. Compare, Vera Lee Revocable Trust v. O’Bryant, 537 S.W.3d 254 (Ark. 2018) (holding that a covenant prohibiting “commercial use” did not prevent an owner from using a home for short-term rental purposes) with Edwards v. Landry Chalet Rentals, LLC, 246 So.3d 754 (La. Ct. App. 2018) (short-term rentals are prohibited by a covenant that does not allow “commercial use”); accord,Tarr v. Timberwood Park Owners Ass’n, 556 S.W.3d 274 (Tex. 2018).
While short term rentals are for residential purposes, the owner is effectively turning their property into a hotel; that’s why the cases are going both ways on this question. The answer may turns on how courts interpret what “residential” use means and whether stability in occupancy is implied in such covenants.
Those seeking clarity on the issue would do well to place clearer language in declarations, for example, prohibiting leases that are less than a certain time length, if they want to be sure to prohibit short-term rentals. Conversely, those who want to allow such uses would do well to say that specifically, providing that rental of property is not prohibited and that that permission extends to short-term rentals. The ambiguity arises because most of the covenants in existence today were created before Airbnb appeared on the scene.