Background
Three Apple Valley homeowners used their properties as short-term rentals through services including Airbnb and VRBO. The subdivision’s recorded declaration limited lots to residential purposes and prohibited business, commercial, or manufacturing enterprises “on said premises,” but it did not expressly prohibit rentals or establish a minimum rental term. Before 2024, the association’s bylaws and rental form contemplated daily, weekly, and Airbnb or VRBO rentals.
In 2024, the Apple Valley Property Owners Association amended its bylaws to prohibit rentals lasting less than six months beginning January 1, 2026. The homeowners sued, contending that such a restriction required an amendment to the recorded declarations. The association counterclaimed that short-term rentals already violated the residential-use covenant. The trial court granted summary judgment to the association, ordered the homeowners to stop short-term rentals, and awarded the association stipulated damages, attorney fees, and costs of $57,386.72 plus interest.
The Court’s Holding
The Fifth District reversed. It held as a matter of law that the declaration did not prohibit these homeowners’ short-term rentals. The properties remained residential because renters used them for activities such as sleeping, eating, and cooking, while advertising, communications, and financial transactions occurred off-site. Receipt of rental income did not establish that a business or commercial enterprise was being conducted on the premises.
The court also held that the association could not create a new land-use restriction by amending its bylaws when that restriction did not exist in the recorded declarations; a short-term-rental ban would require amendment of the restrictive covenants through the declarations’ prescribed process. The other Apple Valley owners were not necessary parties because the requested declaration concerned only the three plaintiffs’ properties and would not bind other owners or change their legal obligations.
The homeowners were entitled to summary judgment on their declaratory-judgment claim and on the association’s counterclaim. The court found that the association breached its contract with the homeowners by imposing the restriction through the bylaws, but factual disputes remained concerning damages, loss, or specific performance. Questions also remained concerning permanent injunctive relief and recoverable fees, costs, and expenses under R.C. 5312.13, requiring remand.
Key Takeaways
- A covenant requiring residential use and prohibiting business or commercial enterprises “on said premises” did not expressly bar short-term rentals where occupants engaged in residential activities at the properties.
- An HOA may not use a bylaw amendment to impose a new restriction on property use that is absent from the recorded restrictive covenants.
- The ruling resolved the homeowners’ declaratory claim and the association’s counterclaim, but left remedies and recoverable amounts for further proceedings.
Why It Matters
The decision reinforces within Ohio’s Fifth Appellate District that restrictions on the use of land must be expressed clearly and are construed against additional limitations. A rental’s duration and income-producing character did not, under this declaration’s language and the undisputed facts, transform residential occupancy into an on-premises commercial use.
For associations and property owners, the opinion underscores the distinction between administering existing restrictions through bylaws and creating new land-use restrictions, which must be adopted through the governing declarations’ amendment process.