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Short-Term Rentals and CC&Rs Question

Short-Term Rentals and CC&Rs

Question: We live in a neighborhood in Washington that has Declarations of Covenants, Conditions, and Restrictions (CC&Rs) that prohibit commercial enterprises and are supposed to be used for residential purposes only. My neighbor is using their house for short-term rentals. They advertise the rental and rent their house out for single days and weeks at a time. Since they are making money by running a rental business, doesn’t this violate the CC&Rs?

Answer: In a general sense, homeowners that lease a home for any period of time e.g., one year, six months, or less such as a short-term rental (“STRs”), does not by itself violate a CC&R prohibiting commercial enterprises. A commercial enterprise has customers parking at the residence for the purpose of transacting business. If that were occurring, we would see goods being sold at the property or services being offered at the property. The money would also be changing hands at the home. The use of a residence for an STR is also within the definition of residential use as long as the renters are only residing in the home and not selling goods or services at on the property. A Washington appellate court made a similar holding in an earlier case, Ross v. Bennett, 148 Wn. App. 40, 51, 203 P.3d 383, 388 (2008), as amended (Jan. 27, 2009). The court in Ross held that a short-term rental is a residential use, and found that the owner’s “receipt of rental income either from short or long-term rentals, in no way detracts or changes the residential characteristics of the use by the tenant.” 

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Mark L. Fowler is an Olympia, Washington attorney practicing Real Estate, Business and Bankruptcy law.

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