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Are You Planning to Rent Your Property Out as a Vacation Rental on AirBnB or VRBO?

Are You Planning to Rent Your Property Out as a Vacation Rental on AirBnB or VRBO? If so, Make Sure You Read Your Association's Restrictive Covenants Carefully.

A Florida appellate court recently held that a property owner’s use of their home as a short-term vacation rental did not violate the association’s restrictive covenants which contained language restricting the properties use to residential purposes and prohibiting their use for business purposes. The Court interpreted the restrictive covenants strictly to arrive at this conclusion.

In this case, the homeowner owned two beach front properties subject to restrictive covenants. The restrictive covenants specifically provided that the properties shall be used only for residential purposes...and not for business purposes. The homeowners routinely rented out their properties as vacation rentals on Vacation Rentals by Owner (VRBO), however, in December of 2015, they received a letter from the association stating that the association had observed that the primary use of their properties was for vacation rental and concluded that they were violating the restrictive covenants.

The association filed a complaint for declaratory judgment against the homeowners alleging that their use of their property violated the restrictive covenants. Specifically arguing that by renting out their properties as vacation rentals, they were using their property for a business purpose and not a residential purpose. The trial court agreed with the homeowners and dismissed the case. The association appealed.

On appeal, the Appellate court held that restrictive covenants are to be strictly construed, stating that the restrictive covenants at issue in this case did not mention anything about vacation rentals, or that the homeowner’s use of their properties as vacation rentals would constitute a prohibited business purpose under the restrictive covenants. Further, the Appellate court stated that “even if the restrictive covenants were susceptible to an interpretation that would preclude short-term vacation rentals, the omission of an explicit prohibition on that use in the covenants is fatal to the position advocated by the association because to impute such a restriction would cut against the principal that such restraints are not favored and are to be strictly construed in favor of the free and unrestricted use of real property.”

Property should not consider this case applicable to all situations since not all covenants are the same. In addition, in light of this decision, associations may take steps to amend their covenants to prohibit vacation rentals. It would prudent to consult with legal counsel before engaging in vacation rentals in a home covered by restrictive covenants.