Craig Zgabay and Tammy Zgabay v. NBRC Property Owners Association
03-14-00660-CV
| Tex. App. | Feb 3, 2015Background
- River Chase Unit Three restrictive covenants (recorded 1999) limit each lot to one dwelling to be used for “single family residential purposes” and state the declarations “shall be liberally construed” to effectuate their purpose.
- Craig and Tammy Zgabay purchased a lot, built a house, and began renting it for short periods (2–8 days); neighbors complained of nuisance conduct by renters.
- The NBRC Property Owners Association demanded cessation; the Zgabays filed a declaratory-judgment action seeking a ruling that short-term leases are permitted; NBRC counterclaimed seeking injunctive relief, statutory damages, and fees.
- The parties filed cross-motions for summary judgment; the trial court granted NBRC’s motion, enjoined the Zgabays from renting the property for temporary or transient purposes, awarded $500 statutory damages and $3,422.50 in attorney’s fees.
- Both parties agreed the covenant language was unambiguous; the central legal dispute concerned construction rules (statutory liberal construction vs. common‑law strict construction) and whether short‑term rentals qualify as single‑family residential use.
Issues
| Issue | Plaintiff's Argument (Zgabay) | Defendant's Argument (NBRC) | Held |
|---|---|---|---|
| Proper rule of construction for restrictive covenants | Common‑law strict construction should control; statute should not displace traditional rule | Texas Property Code §202.003(a) mandates liberal construction; where covenant unambiguous, common‑law strict rule does not apply | Court applied the Munson approach: liberal construction governs; common‑law strict rule only considered if covenant ambiguous; here covenant unambiguous so statute controls and common‑law rule irrelevant |
| Whether short‑term rentals are “single family residential purposes” | Short‑term occupancy by natural persons qualifies as residential; lease duration alone should not bar rental if occupants are individuals/families | Short‑term/transient rentals are temporary, lack the permanence and intent to remain associated with residence, and are not a single‑family residential use | Court held short‑term (transient) rentals are not single‑family residential use and thus are prohibited by the covenant; injunction barring rentals to the public for temporary or transient housing purposes affirmed |
| Relevance of out‑of‑state authorities finding short‑term rentals permissible | A number of out‑of‑state decisions support allowing short‑term rentals and should persuade the court | Out‑of‑state rulings largely follow strict‑construction regimes or involve different covenant language/facts and are not persuasive given Texas’s statutory liberal construction | Court declined to follow those out‑of‑state decisions, distinguishing them on construction rules and factual/covenant differences |
| Vagueness of the injunction / preservation of challenge | Injunction is vague because it effectively imposes an occupancy requirement and lacks detail | Zgabays failed to preserve a vagueness challenge; injunction language mirrors Munson and describes temporary/transient rental conduct with sufficient detail | Vagueness objection was not preserved; the injunction (prohibiting renting to public for temporary/transient purposes) is sufficiently specific and similar to prior Texas authority |
Key Cases Cited
- Benard v. Humble, 990 S.W.2d 929 (Tex. App.—Beaumont 1999) (restrictive covenant limiting use to single‑family residential purposes prohibits short‑term rentals as transient housing)
- Munson v. Milton, 948 S.W.2d 813 (Tex. App.—San Antonio 1997) (distinguishes temporary/transient housing from residence; modifies injunction to bar leasing to public for temporary or transient housing)
- Reagan Nat’l Advert. of Austin, Inc. v. Capital Outdoors, Inc., 96 S.W.3d 490 (Tex. App.—Austin 2002) (discusses covenant construction principles and the interplay of statutory and common‑law rules)
- Mills v. Bartlett, 377 S.W.2d 636 (Tex. 1964) (residence generally requires physical presence plus intent to remain)
- Liberty Mut. Ins. Co. v. Adcock, 412 S.W.3d 492 (Tex. 2013) (courts must give effect to legislative intent when construing statutes)