Property Owner Prevails Over Association

On April 28, 2017, the Florida First District Court of Appeal issued its order in a case of first impression, in favor of the property owner who was leasing his property as a short term vacation rental (hereinafter “owner”) and against the property owner association (hereinafter “association”) that alleged the owner was violating the restrictive covenants prohibiting all non-residential uses of the property.

In Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord (Fla. App., 2017), 1D16-4782, the association filed a declaratory action in Circuit Court against the owner based on the association’s restrictive covenants that prohibited property owners from using the property for any purpose other than for residential use. The association learned that the owner was leasing his property as a short vacation rental unit. The association deemed his use to be for a non-residential purpose (i.e. for business purposes) and filed a lawsuit against the owner seeking an order to prevent him from leasing his property as such.

The trial court dismissed the complaint and reasoned that “[t]he critical inquiry is not the duration of the tenancy, but the character of the actual use of the property by those residing thereon.” The court noted that “the proper focus is on ‘the actual use which is undertaken on the property,’ the nature of the properties’ use is not transformed from residential to business simply because the properties may be subject to a regulatory scheme that requires licensure and Appellees may earn income from the rentals.” Lastly, the trial court found that the restrictive covenants were silent on the issue of short-term rentals and thus any ambiguity “as to whether that use is permitted must be resolved in favor of Appellees’ free and unencumbered use of their properties.”

The Circuit Court denied the association’s complaint, and the association appealed to the First District Court of Appeal. Since there were no Florida cases on point, the court looked at many cases outside of Florida for guidance. In those cases, the court noted that those jurisdictions “have almost uniformly held that short-term vacation rentals do not violate restrictive covenants nearly identical to those at issue in this case.” The court believed that those other courts provided good reasoning to support the legal conclusion.

The appellate court noted that the association offered no proof that the owner was using the property for any purpose other than residential use, as compared to a bed-and-breakfast or other similar situation. The nature of the use was residential, even though the owner was leasing the property to tenants. The court also noted that the restrictive covenants did not specifically prohibit owners from leasing the property as short term vacation rentals, and used the rule of construction that “restrictive covenants are to be strictly construed in favor of the landowner and the free use of his property” to uphold the Circuit Court’s ruling.