Short-Term Rentals Violate Restrictions to “Private Dwelling” and Prohibiting “Commercial Use"

In Eager v Peasley, a published Michigan Court of Appeals opinion, a property owner rented her house out through homeaway.com for short term rentals, consiting of periods between 2 nights and 7 nights.  Other lot owners filed suit seeking an injunction on the basis that the rentals violated covenants provideing that "[T]hat the premises shall be used for private occupancy only; that no building to be erected on said lands shall be used for purposes otherwise than as a private dwelling and that “that no commodity shall be sold or offered for sale upon said premises and no commercial use made thereof.  The trial court dismissed the case, but the Michigan Court of Appeals reversed.

After reviewing several prior cases interpreting restrictions to “private residence,” “one single private dwelling house,” and “residence purposes only,” the court held that the use here was inherently transient and violated the restrictions.  The court also found that the short term rentals violated the “no commercial use” restriction, adopting the reasoning of a previous, unpublished Court of Appeals opinion.

By a footnote, the court noted that it had not been asked to address, and did not comment on, whether long-term rentals of dwellings for private residential use would violate the “no commercial use” provision of the restrictions.

© Steve Sowell 2017