477 P.3d 283
Mont.2020Background
- Brown Drake, LLC owns the Brown Drake Lodge (a fly-fishing lodge built 2017) located in the Craig Tracts HOA and advertises short-term, nightly rentals; it is licensed as a Montana "tourist home."
- The recorded Amended Covenants (1984) restrict use to "residential purposes only;" an earlier 1983 version had expressly banned commercial, motel/hotel/apartment uses but that language was removed in the amendment.
- Brown Drake’s owners occupy the Lodge intermittently (about eight to nine months per year) and the Lodge is rented to paying guests at a nightly rate; bookings are handled by a local shop.
- Prior to purchase Brown Drake was told at least one other HOA home had been rented short‑term (including a period when the HOA president rented it), supporting an expectation of permissive short‑term rentals.
- The HOA sued for declaratory and injunctive relief arguing the Lodge’s short‑term rentals violate the covenant; the District Court granted summary judgment for Brown Drake, and the Montana Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether operating a short‑term rental lodge violates the Amended Covenant’s "residential purposes only" restriction | Short‑term/transient occupants are not "residents" and thus rentals violate the covenant | Use is "residential" because guests perform ordinary living activities (sleeping, eating, bathing); duration alone does not change character of use; prior short‑term rentals and deletion of express commercial prohibition support permissive use | Covenant language is ambiguous; extrinsic evidence (prior use, amendment) supports Brown Drake; use does not violate the covenant; summary judgment for Brown Drake affirmed |
Key Cases Cited
- Creveling v. Ingold, 331 Mont. 322, 132 P.3d 531 (2006) (restrictive covenants interpreted to ascertain parties' intent; clear language applied as written)
- Czajkowski v. Meyers, 339 Mont. 503, 172 P.3d 94 (2007) (restrictive covenants construed strictly; ambiguities resolved in favor of free use)
- Tipton v. Bennett, 281 Mont. 379, 934 P.2d 203 (1997) (defines "residential" as "dwelling in a place for some time")
- Yogman v. Parrott, 937 P.2d 1019 (Or. 1997) (holding "residential" may be ambiguous because "residence" can mean mere dwelling or long‑term home)
- Wilkinson v. Chiwawa Communities Ass’n, 327 P.3d 614 (Wash. 2014) (upholding short‑term rentals under a similar covenant focusing on activities, not duration)
- Santa Monica Beach Prop. Owners Ass’n v. Acord, 219 So.3d 111 (Fla. Ct. App. 2017) (short‑term renters using property for ordinary living purposes do not necessarily violate "residential purposes" restrictions)
- Hensley v. Gadd, 560 S.W.3d 516 (Ky. 2018) (contrary view: transient occupants are not "residents" and short‑term rentals can violate residential covenants)