Restricting the Restrictions

July 08, 2024

Do you belong to a homeowners’ or condominium association and want to rent out your home as a short-term rental?  If you do, make sure that you read the restrictions in your association’s declaration to make sure that short-term rentals are not a violation of those restrictions. The case of Ruffed Grouse Ridge Owners’ Association v. Hura, 2024 WL 2787873 (Pa. Cmwlth. Ct. May 31, 2024)  involved this exact issue.

 Mr. Hura purchased a property in the Ruffed Grouse development in 2020.  Mr. Hura did not reside at the property, but rented the property out to private parties and advertised on various rental websites, including his own.  The rentals were short-term: mainly over the weekend.

  The development was subject to a Schedule of Protective Restrictions that was incorporated by reference in Mr. Hura’s deed.  The restriction at issue stated:

            “The above-described premises shall not be subdivided, and any building to be erected thereon, shall not at any time be used for commercial purposes, but the use of the same shall be limited strictly to private residential purposes only.”

 In 2021, the Association amended the bylaws to prohibit the rental of a property for less than 30 days.  Mr. Hura disputed that the amendment applied to him. In 2022, the Association sent a cease-and-desist letter to Mr. Hura, but Mr. Hura continued to rent out the property on a short-term basis.  The Association filed a lawsuit to stop Mr. Hura from renting out the property on a short-term basis. The trial court found in favor of Mr. Hura, and  the Association appealed to the Commonwealth Court.

The issue before the Commonwealth Court was the meaning of the phrase “private residential purposes only” in the original restriction.  The Association argued that the phrase restricts the property’s use only to the owner and family members, and that using the property for short-term rentals is a commercial use in violation of the restriction.  The Commonwealth Court noted that restrictive covenants are not favored in the law, but are legally enforceable.  However, a restrictive covenant is to be strictly construed against the person trying to enforce it.  If there is any ambiguity, it must be construed against the one to be benefitted by the restriction.

The Commonwealth Court found that the plain language of the original restrictive covenant did not limit the property’s use only to the owner, and did not prohibit rental of the property.  Further, the original restriction made no distinction between short-term and long-term rentals. Since short-term rentals were not contemplated at the time of the creation of the original restriction, the Commonwealth Court determined that the intent of that restriction was to prohibit an owner from operating a business or commercial enterprise on the property. The Commonwealth Court also found that it was error for the Association to focus on the transient nature of the rentals.  Rather, the focus should be on the use of the property. Here, the use of the property was still residential, even though for a short period of time.  The Commonwealth Court found that the Association had waived the argument as to whether or not the 2021 amendment to the bylaws was valid, so that issue was not decided.

As this case demonstrates, language in a restrictive covenant needs to be as clear as possible in order to be enforced. If there is any wiggle room in the language, it is going to be used against the person trying to enforce the restriction.