Kentucky Appellate Court decision (August 8, 2014).
The appellants in this case were homeowners of a property located within a common interest development that they used for short term rentals. The homeowners association brought suit against the homeowners seeking injunctive relief contending that the governing CC&Rs restricted use of the property to single family residential purposes only with no business, commercial, trade, or professional uses permitted.
The trial court found in favor of the HOA determining that the appellant’s were using the property for a business in violation of the CC&Rs. The appellants argued that the CC&Rs were ambiguous in multiple respects and should be interpreted to allow the activity.
The appellate court found that the Appellants labeled their home as a „motel,“ for tax purposes, treated it as a business by advertising it on various websites, utilizing a rental agreement along with check-in and check-out times, and by paying taxes required of hotels and motels. The court concluded that the Appellants rental enterprise was a business.
In addressing the appellants‘ contention that the CC&Rs were ambiguous on the issue, the court stated that construing ambiguous restrictive covenants requires an evaluation of the party’s intention and that Kentucky has approached restrictive covenants from the viewpoint that they are to be regarded more as a protection to the property owner and the public rather than as a restriction on the use of property.
In affirming the trial court’s decision, the appellate court found that the homeowners were operating a business by renting out the property for remuneration in the same manner as a hotel or motel and that the creators of the subdivision did not intend for properties in the subdivision to be utilized as motels or hotels in the manner in which Appellants were using the property.
See case decision: Vonderhaar_v._Lakeside_Place_Homeowners_Ass’n_Inc._(Ky._App._2014)1