A judge ruling was given to a dispute over Airbnbs in a Tennessee mountain town. The ruling stated that the covenants were too vague to ban short-term rentals.
Dispute Over Airbnbs
The New Tazewell HOA board filed a lawsuit against two dozen part-time members who used their homes as short-term vacation rentals (STVRs). The lawsuit in the East Tennessee neighborhood started in 2022. It alleged that the STVRs violated the community’s rules.
Meanwhile, several members filed lawsuits against the board in separate cases. One lawsuit alleged that the board did not follow the proper election voting procedure. Another lawsuit states that the board defrauded the members by leading them to believe they could use their homes for short-term rentals.
Judge Ruling in Claiborne County
On March 4, 2024, the Lone Mountain Shores community on Lake Norris received a ruling in Claiborne County. The judge ruled that the covenants were too vague to ban STVRs.
Chancellor Elizabeth Asbury did not address other legal questions, including whether past HOA boards allowed short-term rentals. Instead, the judge’s ruling was based on the fact that the covenants could be interpreted in different ways. The rules did not expressly forbid rentals through platforms like Vrbo and Airbnb.
In addition, the judge referred to a previous 2023 ruling in the Tennessee Supreme Court. The state’s highest court said the word ‘residential’ was too vague to justify short-term rental bans. In Lone Mountain Shores, the rule restricted properties to ‘single-family residential purposes.’ The HOA banned rental accommodations like bed and breakfasts and hotels.
According to Chancellor Asbury, the phrase ‘single-family residential purposes’ could be used on Airbnbs as long as the entire property was rented to an affiliated group or family that used it like a home. Moreover, she stated that the neighborhood’s rentals were not ‘commercial’ if the homeowners did not offer services like entertainment or meals.
Lone Mountain Shores Divided
The ruling surprised many full-time residents who supported the board at a January court hearing. Moreover, the current president, Claudio Biltoc, only inherited the issue from the previous HOA president. He stated that he would accept the judge’s ruling without further appeal. According to Biltoc, the board would review the ruling and discuss how to move forward to close the issue.
The HOA board’s lawyer, Preston Hawkins, asserted that the HOA’s rules banned all rentals, including short-term rentals, even if they weren’t previously enforced. However, the board does have an option to add a rule that prohibits rentals shorter than 30 days. Chancellor Asbury also wondered why the board hadn’t already done this. Amid their disappointment, the homeowners who opposed the board celebrated the judge’s decision.
While the ruling settles one lawsuit, the neighborhood remains divided. Many relationships have already been severed in Lone Mountain Shores. Part of the community believes short-term rentals disrupted the neighborhood’s identity. Meanwhile, the other community members believed they had a right to rent. Some members used the rental income to pay for a second residence.