Short Term Residential Rental Covenant

This week we wanted to draw your attention to a very interesting Warren County Supreme Court decision issued by Justice Martin D. Auffredou which, in part, held that a party’s apparent use of a single-family dwelling for short-term rentals violated a Restrictive Covenant in the Deed that limited use only for “single family residential purposes.”.
The relevant facts of, and a link to, the case are set forth below.

A Declaration of Restrictions affecting a subdivision, which includes parcels of land owned by each of the Plaintiff and the Defendants improved by single-family homes, requires that the properties in the subdivision “shall be used only for single family residential purposes” and shall not be used for commercial activity. The restriction ran with the land and was set forth in the deeds out of the common grantor and in all subsequent deeds.
The Declaration allows for an owner to rent out its property. However, the Plaintiff’s use of its parcel was for “ongoing, short-term rentals of its property that appear to range in duration from a weekend to a couple of weeks.” Among other issues presented, the Supreme Court, Warren County, ruled on whether that use of the Plaintiff’s property was consistent with the restriction. (Causes of action raised by the Plaintiff and other counterclaims of the Defendant were not ruled upon in this decision).
Noting that “…the court’s research confirms a dearth of authority in New York State on the construction to be given to the phrase ‘single family residential purposes’ when such appears in a deed covenant or restrictive declaration affecting property”, the Court ruled in favor of the Defendants, holding that the Plaintiff’s use of its property “for ongoing, repeated, short-term rentals to transient tenants is in violation of the restrictive covenants in its deed and the declaration of restrictions that burdens the property…” The Court enjoined the Plaintiff from continuing that use of its property.
The Court referenced a decision of the Appellate Division, Third Department, which held that “[t]ransient living…falls outside the scope of a single-family residential use…”
West Mountain Assets LLC v. Dobkowski, 2023 NY Slip Op 23064, decided March 7, 2023, is posted at
https://www.nycourts.gov/reporter/3dseries/2023/2023_23064.htm

While this decision is subject to appeal, it currently provides a warning to you and your clients to inquire about potential Restrictive Declarations if the owner’s intention is to utilize a premises for short-term rentals.