By By DAVID LUTHER WOODWARD, Esq.
Published May 7, 2017
David and Virginia Acord who live Sylvester, Georgia, a small
town in the central, Southwest part of the state, bought a vacant lot in Santa
Monica Beach Subdivision in Panama City Beach, Florida, and built a large
multi-bedroom vacation house on the property. Santa Monica is one of the earlier
post-war developments in western Bay County which when it was developed the
developers recorded restrictions purporting to affect every lot in the
subdivision; however, the restrictions did not create a homeowners association
as is done these days. The HOA was not incorporated until 1983.
The Acords intended to rent their house through “Vacation
Rentals by Owner” to assist paying for it over time. Some of the owners at Santa
Monica were displeased with what the Acords were doing and in the name of the
HOA and some of the owners an action was filed in the Circuit Court in Bay
County seeking a determination that the restrictive covenants as written
prohibited the rental activity as “conducting a business”.
The case was dismissed upon a motion by the Accords and
Alford asserting that the Plaintiff’s complaint “failed to state a cause of
action”–that is to say that the activity was not prohibited by the restrictions.
The circuit judge ruled in favor of the Defendants and the case was dismissed.
The Plaintiffs appealed to the First District
Court of Appeal in Tallahassee and on April 28, 2017, the court affirmed the
dismissal. Overstreet, J. wrote the opinion of the court ruling that the
restrictions did not prohibit renting the house as a “dwelling place” and
differentiating that from a bed-and-breakfast which it called “a small motel”.
It specifically found that renting a “dwelling place” is not conducting a
business and that the length of the rental is inconsequential.
In point of fact the court quoted itself
when it said “even if the restrictive covenants were susceptible to an
interpretation that would preclude short-term vacation rentals, the omission of
an explicit prohibition on that use in the covenants is fatal to the position
advocated by the Association in this case because ‘[t]o impute such a
restriction would cut against the principle that such restraints are not favored
and are to be strictly construed in favor of the free and unrestricted use of
real property.’” Most interestingly, the court found cases from eleven other
states that held similarly.
At the end of the day the court ruled that if an
activity is not specifically prohibited in restrict covenants, the covenant
cannot be “stretched” to make the activity fit.
David Luther Woodward
HERE TO READ THE COMPLETE RULING