Zgabay v. NBRC Property Owners Association (Texas)
This case addresses a short-term rental case on appeal at the Third Court of Appeals in Austin, Texas. The trial court held correctly that a use restriction prohibiting anything other than “single family residential use” unambiguously prohibits short-term rentals. The trial court’s rationale was that a short-term rental is not a residential use because the short-term tenant does not have the requisite intent to remain.
Many community associations are now having to deal with transient housing uses and the deleterious effects such uses have on residential neighborhoods. Given that many associations are governed by restrictive covenants adopted prior to short-term rentals becoming popular, and given that those covenants usually require a super-majority to amend to be more specific, an appellate level decision affirming that the covenants as they stand prohibit this type of nonresidential activity would be beneficial to community associations throughout Texas.
The importance of this ruling has strong ramifications for the interpretation of covenants that are created for residential purposes and then leased out for short periods of time by the owner. The lower courts have held these short term rentals – often just a few days in length – to not be a residential purpose but more commercial.
Brief
Prior Ruling: Lower Court Decision
Status: Pending
CAI Amicus Brief Author: Darryl, W. Pruett, Esq.
CAI Amicus Brief Review Committee: Robert Diamond, Esq; Richard Ekimoto, Esq; Steven Sugarman, Esq; Gary Kessler, Esq; Jennifer Loheac, Esq.