Real Cases in Real Estate By Andrea Lee Negroni, Esq. – July 8, 2014 Update

Updates for the Week of July 8, 2014

Washington subdivision homeowners cannot prevent neighbors from renting their homes for short terms. The Wilkinsons challenged a covenant adopted by a majority of homeowners in Chiwawa, a planned single-family residential community in Chelan County, Washington. The Chiwawa community is a mix of permanent residents and vacation homes. The restriction challenged barred short-term rentals of less than 30 days. Other Chiwawa community covenants prohibit commercial use of the homes, and restrict the size of signs on the lots, including rental and sale signs.

The Chiwawa Communities Association claimed renting out a home is a commercial, not a residential purpose, and that renting to unrelated persons violated the “single family” nature of the community. The Washington Supreme Court disagreed.

Several aspects of this case are noteworthy. First, the Supreme Court held that if a vacation renter uses a rented home for eating, sleeping and other residential purposes, the use is residential, not commercial. The residential nature of property use is not changed by the fact that the homeowner receives rental income, or pays occupational or occupancy taxes. Second, the Court held that “single family” property does not require that renters be part of the same family, because the opposite result would be absurd. For example, homeowners hosting unrelated weekend guests or cohabiting with friends would be violating the single-family restriction. Therefore, short-term renting to unrelated persons does not violate a single-family use covenant or a residential use covenant. (If homeowners provide commercial services to their tenants, as is customary in nursing homes and in-home child care facilities, the outcome might be different, but the Wilkinsons didn’t provide onsite services to their tenants.)

Even before the short-term rental restriction, Chiwawa community covenants restricted the size of “for rent” signs. The Court sought to interpret this covenant in a manner protecting homeowners’ collective interests, rather than simply adopting a “free use of land” standard. The fact that “for rent” signs were permitted by the covenants suggested Chiwawa’s developer contemplated rentals, and that buyers anticipated having this right when they bought their homes. So a majority of Chiwawa homeowners could not adopt a new covenant depriving their neighbors of the right to rent their homes.

Wilkinson v. Chiwawa Communities Association, --- P.3d ----, 180 Wash.2d 241 (2014), [enhanced version available to lexis.com subscribers].

Real Cases in Real Estate is a periodic update on real estate law, with legal principles illustrated and explained by lawsuits from around the country. The topics are wide-ranging for appeal to a broad spectrum of readers including lawyers, homeowners, investors and the general public. Andrea Lee Negroni, a Washington DC attorney and legal writer with 25 years of experience in financial services and mortgage law, contributes the case summaries.

Followers of Real Cases in Real Estate will learn and be entertained by lawsuits involving nuisance, trespass, zoning violations, deed restrictions, title insurance, public utilities, mechanics liens, construction defects, adverse possession, foreclosure and eviction, divorce and marital property rights, tenants' rights, and more. Real Cases in Real Estate uncovers the unpredictable, amusing, and sometimes outrageous disputes between next-door neighbors, contractors and homeowners, condo boards and residents, real estate brokers and homebuyers, and zoning administrators and developers.

Each fully cited case summary highlights the essential law of the case and explains the principal legal theories and concepts relevant to the outcome. Plain language treatment makes Real Cases in Real Estate accessible to lawyers and laymen alike.

Whether you follow real estate law professionally or as a hobby, you'll find something new and useful in every issue of Real Cases in Real Estate.

For more information about LexisNexis products and solutions connect with us through our corporate site