572 P.3d 809
Mont.2025Background
- Plaintiffs (the Neighbors) and R&R Mountain Escapes, LLC are owners of parcels in a rural subdivision near Whitefish, Montana, subject to restrictive covenants recorded in 1990.
- R&R purchased a parcel in 2020, began using it for short-term rentals via Airbnb/VRBO, and obtained a county permit for such use.
- The Declaration of Covenants prohibits commercial uses and activities that are nuisances, and requires single-family residential use, but allows rentals generically and agricultural activity.
- Plaintiffs filed suit to enjoin R&R’s short-term rental activity, arguing it violated the Declaration; both parties sought summary judgment.
- The District Court found the Declaration ambiguous, but held short-term rentals were prohibited as commercial uses, and denied the Neighbors’ request for attorney fees.
- Both sides appealed: R&R challenging the prohibition on rentals, Neighbors cross-appealing the denial of fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Declaration prohibits short-term rentals | Short-term rentals violate covenants barring commercial use and requiring residential, single-family, country living purposes | No explicit ban on rentals- rentals, even short-term, are not commercial and are thus permitted; covenants are ambiguous and should allow free use | The covenants unambiguously prohibit short-term commercial rentals; District Court affirmed |
| Attorney fees to prevailing party | Plaintiffs should receive fees as prevailing parties under Declaration | Fees not warranted due to ambiguity in covenants | Denial of fees affirmed (no abuse of discretion) |
Key Cases Cited
- Craig Tracts Homeowners’ Ass’n, Inc. v. Brown Drake, LLC, 477 P.3d 283 (Mont. 2020) (discussing ambiguity in "residential purpose" covenants and permitting extrinsic evidence)
- Myers v. Kleinhans, 556 P.3d 529 (Mont. 2024) (interpreting commercial business prohibition in restrictive covenants and holding unambiguous covenants prohibit for-profit rentals)
- Town & Country Ests. Ass’n v. Slater, 740 P.2d 668 (Mont. 1987) (affirming expectation of enforcement of restrictive covenants among subdivision owners)