Craig Zgabay and Tammy Zgabay v. NBRC Property Owners Association
03-14-00660-CV
| Tex. App. | Mar 16, 2015Background
- This amicus brief (Texas CAI chapters) challenges short‑term/transient rentals of single‑family residences in River Chase Unit Three, arguing such rentals violate covenants limiting use to "single family residential purposes."
- The Zgabays operated whole‑house short‑term rentals while not residing on the property; the POA obtained an injunction prohibiting that use and appealed.
- Amici argue restrictive covenants should be construed to effect the framers’ intent and, absent ambiguity, need not be strictly construed in favor of free use.
- Central legal contention: transient rentals are commercial ("in the nature of a hotel") and therefore non‑residential; Texas tax statutes and Comptroller questionnaire treat transient rentals as a hotel business subject to hotel occupancy tax.
- Amici rely on precedent holding residential restrictions bar commercial profit‑making uses (e.g., boarding houses, hotels, bed‑and‑breakfasts) and on Attorney General and municipal regulation recognizing the commercial nature and neighborhood impacts of short‑term rentals.
Issues
| Issue | Plaintiff's Argument (Zgabay) | Defendant's Argument (NBRC/Amici) | Held |
|---|---|---|---|
| Whether transient/short‑term whole‑house rentals qualify as "single family residential purposes" | Any occupancy by a members of a single family is "residential"; consanguinity and owner presence control | Transient rentals are commercial/non‑residential even if rented to a single family; transients lack intent to remain | Court treated transient rentals as non‑residential/business use and upheld injunction (amici seek affirmation) |
| Whether operating transient rentals while owner absent changes analysis | Owner absence should not presumptively convert use to non‑residential; mere owner nonpresence is irrelevant | Operating as a business (advertising, booking, charging fees) evidences commercial purpose regardless of owner presence | Court and precedent focus on nature of use (commercial hotel‑like activity), not owner presence |
| Whether covenant language is ambiguous and how to construe it | Ambiguity exists because covenant mentions "tenant" without durational limit; strict construction should favor free use | Covenant unambiguous: limits use to single‑family residential purposes, excluding commercial/hotel uses; liberally construed to effect intent | Where covenant is unambiguous, enforce restriction to prevent commercial use; ambiguities resolved by intent and purpose of restriction |
| Relevance of tax/regulatory treatment (hotel occupancy tax, Comptroller form) | Tax labels are not dispositive of deed interpretation | Tax law and Comptroller questionnaire treat short‑term rentals as hotels/commercial enterprises and reflect public policy; supports non‑residential classification | Regulatory/tax treatment is persuasive evidence that transient rentals are commercial in nature and may be treated as such for covenant enforcement |
Key Cases Cited
- Cowling v. Colligan, 312 S.W.2d 943 (Tex. 1958) (residential‑use covenant bars business/commercial uses)
- Southampton Civic Club v. Couch, 322 S.W.2d 516 (Tex. 1959) (use of residence primarily for financial gain—rooming/boarding or renting—may be enjoined under residential covenant)
- Mills v. Bartlett, 377 S.W.2d 636 (Tex. 1964) (residence requires physical presence and intent to remain; transient occupants are not residents)
- Benard v. Humble, 990 S.W.2d 929 (Tex. App.—Beaumont 1999, pet. denied) (weekend/short‑term rentals are transient, not residential)
- Pilarcik v. Emmons, 966 S.W.2d 474 (Tex. 1998) (restrictive covenants interpreted under contract principles; unambiguous language controls)
- Owens v. Ousey, 241 S.W.3d 124 (Tex. App.—Austin 2007, pet. denied) (court’s intent is primary in covenant construction; use‑restriction analysis guided by parties’ intent)