Summary
The Eighth Circuit affirmed summary judgment for Jason and Maria Aamodt in a dispute over whether renting a vacation home violated restrictive covenants requiring property to be used for residential purposes only. Applying Arkansas law, the court held that the phrase "residential purposes" was ambiguous as to short-term rentals and that doubts must be resolved in favor of unrestricted use of land. The court concluded that the short-term rental did not violate the restrictive covenants.
Topics
Practice areas
Questions Presented
- Whether the restrictive covenant requiring property in Phase A of the subdivision to be used for residential purposes only prohibited the Aamodts from renting their property to friends and other guests on a short-term basis as a vacation home.
- Whether the district court properly granted summary judgment to the Aamodts under Arkansas law.
Holdings
- The phrase "residential purposes" is ambiguous as applied to the short-term rental of the property because the restrictive covenants do not address short-term vacation rentals and the asserted restriction is not clearly apparent from the covenant's language.
- The Aamodts' short-term rental of the property as a vacation home did not violate the restrictive covenants.
- Summary judgment for the Aamodts was proper, and the plaintiffs were not entitled to summary judgment.
Key quotations
“We agree with the Aamodts that the phrase "residential purposes" is ambiguous as to the short-term rental of property.” (-6-)
“The restriction that Appellants would impose on the Property is thus not "clearly apparent" from the plain language of the Restrictive Covenants.” (-6-)
“For the reasons set forth above, we hold that the Aamodts' rental of the Property does not violate the Restrictive Covenants.” (-10-)
Factual background
Jason and Maria Aamodt purchased a house on Lots 23 and 24 in Phase A of the River Ridge Park Subdivision as a second home. When not using the property, they rented it to friends and other guests as a vacation home. The property was subject to restrictive covenants requiring building sites to be used for residential purposes only, except for specified lots designated commercial or residential. Other property owners contended that short-term vacation rentals constituted a nonresidential or commercial use.
Procedural history
The plaintiffs filed suit in the Circuit Court of Baxter County, Arkansas, seeking a declaration that the defendants' short-term rental of a vacation home violated restrictive covenants and seeking injunctive relief. The defendants removed the action to the United States District Court for the Western District of Arkansas under diversity jurisdiction. The parties stipulated that no material facts were disputed and filed cross-motions for summary judgment. The district court granted the defendants' motion and denied the plaintiffs' motion, and the Eighth Circuit affirmed.