With the rise of Airbnb and other similar services, more and more homeowners are looking to rent out their property on a short-term basis. Whether a homeowner is allowed to do so is a question that can be answered by reviewing the association’s restrictive covenants found in the community’s Declaration of Covenants, Conditions, and Restrictions (“CCRs”). This question turns on whether the covenants restrict the property for residential use or for commercial use. The seminal Washington case on this issue is Wilkinson v. Chiwawa Communities Ass’n. 180 Wn.2d 241, 327 P.3d 614, 616 (2014).
Wilkinson v. Chiwawa Communities Ass’n
The Supreme Court of Washington held in this case that the short-term vacation rentals of homes was a “residential use” of the home. As such, the covenants prohibiting commercial use of a home were not violated. This decision involved owners of homes in the Chiwawa River Pines Community bringing a motion for summary judgment to invalidate an amendment to the community covenants prohibiting rental of their homes for less than 30 days.
The covenants of the homeowners’ association did bar the use of any lot for commercial and industrial purposes. However, there was also a covenant which restricted the size of rental signs. The Court determined that this was evidence that the Chiwawa covenants contemplated rentals and did not intend to restrict them. Moreover, the Court found that if a vacation renter uses a home “for the purposes of eating, sleeping, and other residential purposes,” this use is residential, not commercial, no matter how short the rental duration.
Because the covenants did not place residents on notice that short-term rentals would be prohibited, the court held that the amendment must be invalidated to protect the “reasonable and settled expectations of landowners in their property.” The Court emphasizes that its holding does not prohibit residential communities from prohibiting short term rentals. Rather Chiwawa River Pines community did not do so through covenants allowing rentals, while prohibiting commercial uses and limiting homes to single-family structures.
Another Washington Case
A Washington appellate court made a similar holding in an earlier case, Ross v. Bennett, 148 Wn. App. 40, 51, 203 P.3d 383, 388 (2008), as amended (Jan. 27, 2009). The court in Ross held that a short-term rental is a residential use, and found that the owner’s “receipt of rental income either from short or long-term rentals, in no way detracts or changes the residential characteristics of the use by the tenant.”
National Cases
On a national level, the majority of jurisdictions have held that short-term rentals are residential uses and not commercial uses. Slaby v. Mountain River Estates Residential Ass’n, 100 So.3d 569 (Ala. Civ. App. 2012) (explaining that the cabin at issue is “used for ‘residential purposes’ anytime it is used as a place of abode, even if the persons occupying the cabin are residing there temporarily during a vacation”); Lowden v. Bosley, 395 Md. 58, 909 A.2d 261 (2006) (“The owners’ receipt of rental income in no way detracts from the use of the properties as residences by the tenants.”); Mason Family Trust v. DeVaney, 146 N.M. 199, 207 P.3d 1176 (N.M. Ct. App. 2009) (“While [the owner’s] renting of the property as a dwelling on a short-term basis may have constituted an economic endeavor on [his] part, to construe that activity as one forbidden by the language of the deed restrictions [prohibiting use for business or commercial purposes] is unreasonable and strained. Strictly and reasonably construed, the deed restrictions do not forbid short-term rentals for dwelling purposes.”).[1]
However, not all jurisdictions have held in favor of short-term rentals equating to a residential use. For example, In Edwards v. Landry Chalet Rentals, the Louisiana Court of Appeals held that a short-term rental of a home was a commercial use because the renters “are in the property on a transient basis only and are not utilizing the property for residential purposes.” Edwards, 246 So. 3d 754, 758 (La. Ct. App. 2018), writ denied, 244 So. 3d 437 (La. 2018). See also Hensley v. Gadd, 560 S.W.3d 516, 524 (Ky. 2018) (“[O]ne-night, two-night, weekend, weekly inhabitants cannot be considered ‘residents’ within the commonly understood meaning of the word, or the use by such persons as constituting ‘residential.’”); Eager v. Peasley, 911 N.W.2d 470, 478 (Mich. Ct. App. 2017) (“Defendant’s transient, short-term rental usage violates the restrictive covenant requiring ‘private occupancy only’ and ‘private dwelling.’”).
In summary, Washington law has held that a short-term rental of a home is a residential use, and this has been similarly held by the majority of other courts across the country. However, as noted in the Wilkinson opinion, this holding does not prevent covenants from prohibiting short-term rentals of homes. Therefore, homeowners must review their CCRs to see if there are any specific restrictions on short-term rentals. If not, and the property may only be used for residential uses, the homeowners are free to rent their property on a short-term basis, as current Washington law supports their decision.
[1] See also Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord, 219 So. 3d 111, 114 (Fla. Dist. Ct. App. 2017); Estates at Desert Ridge Trails Homeowners’ Ass’n v. Vazquez, 300 P.3d 736 (N.M. Ct. App. 2013); Russell v. Donaldson, 222 N.C. App. 702, 731 S.E.2d 535 (2012); Scott v. Walker, 274 Va. 209, 645 S.E.2d 278 (2007); Yogman v. Parrott, 325 Or. 358, 937 P.2d 1019 (1997) (en banc); Catawba Orchard Beach Ass’n v. Basinger, 115 Ohio App.3d 402, 685 N.E.2d 584 (1996).
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