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].
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