Susan Aldrich v. Sugar Springs Property Owners Association Inc
345 Mich. App. 181
Mich. Ct. App.2023Background
- Sugar Springs Property Owners Association governed by a 1971 Declaration of Covenants and Restrictions limiting lots to “residential purposes only” and permitting only single-family residences unless commercial/multi-family use is designated on the plat; developer reserved specific areas for commercial development.
- Plaintiffs owned property in Sugar Springs and rented their homes for short-term vacation stays (less than six months); plaintiffs did not present evidence of continuous personal residence at those properties.
- Association’s board adopted a resolution (effective Jan 1, 2021) banning rentals under six months after consulting counsel that short-term rentals were not allowed under existing covenants.
- Plaintiffs sued for declaratory relief asserting short-term rentals were permitted; trial court granted plaintiffs’ summary-disposition motion under MCR 2.116(C)(10) and enjoined enforcement of the resolution.
- Defendant moved for reconsideration and for relief under MCR 2.116(I)(2); the Court of Appeals reversed, holding the covenant precluded short-term rentals and ordering summary disposition for the Association.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether short-term rentals are permissible under the Covenant’s “residential purposes only” language | Covenant does not expressly ban short-term rentals, so transient rentals are a permissible residential use | Covenant limits lots to single-family residential use and must be read as a whole to prohibit nonresidential/commercial uses | Court: Short-term rentals are not consistent with the covenant’s residential single-family scheme and are barred |
| Whether renting property short-term constitutes prohibited “commercial use” | Short-term rentals are residential in nature, not commercial, and nothing in the Covenant expressly forbids them | Renting to transient guests is a profit-driven, commercial activity and thus barred where commercial use was reserved only to designated plat areas | Court: Renting property for short-term use is a commercial use and violates the Covenant’s restrictions |
| Whether prior short-term rentals or omission of an explicit ban created ambiguity or waiver | Occasional historical rental use and lack of an explicit clause banning short-term rentals create ambiguity favoring free use | Occasional rentals differ in character from permitted residential use and do not waive or defeat the restriction; developer intent and plat designations control | Court: No waiver or ambiguity shown; prior rentals did not alter covenant character and do not permit short-term rentals |
Key Cases Cited
- Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich 206 (Michigan Supreme Court) (unenforced covenants are property rights; unambiguous restrictions are enforced as written)
- O’Connor v Resort Custom Builders, 459 Mich 335 (Michigan Supreme Court) (timeshare/interval ownership lacks the permanence required for "residential purposes")
- Eager v Peasley, 322 Mich App 174 (Court of Appeals) (transient short-term rentals violate deed language limiting property to private occupancy/private dwelling and may also be commercial use)
- Terrien v Zwit, 467 Mich 56 (Michigan Supreme Court) (defines "commercial use" as profit-making or activity carried on for profit)
- Conlin v Upton, 313 Mich App 243 (Court of Appeals) (bylaws and similar governing instruments constitute binding contractual agreements when validly promulgated)
- Magley v M & W Inc, 325 Mich App 307 (Court of Appeals) (contracts and covenants must be read as a whole and construed to give effect to every provision)