Daily Development for
Monday, February 16, 1998

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

SERVITUDES; USE RESTRICTIONS; "RESIDENTIAL ONLY:" Property owners' use of their single family homes as rental properties did not violate the terms of subdivision deed's restriction of us to "private residences only," but question remains open as to tenant's right to use subdivision's recreational amenities.

Catawba Orchard Beach Assn. v. Basinger, 685 N.E. 2d 584 (Ohio App. 6 Dist. 1996).

1922 subdivision deed restrictions stated that lots were to be used for "private residences," and that only structures designed for single family use could be built. Additional deed provision granted each lot owner the right to use the streets and the waterfront and "park" for recreation, but provided that these recreational amenities must be used for "noncommercial purposes." In 1949 the Association was formed to hold title to the common areas and members of the Association were defined as lot owners. Owners purchased three lots in 1990 and in 1993 built single family homes on two of them with the express purpose of renting them out. They advertised them as houses for rent with beach and subsequently rented them out.

The Association filed a complaint in May 1995, alleging Owners were renting their property and allowing renters to use the common areas in violation of the deed restrictions, had failed to pay their 1994 assessments of $345, and were causing irreparable harm to other owners. The Association requested that the restrictions be enforced and Owners be temporarily and permanently enjoined from violating them.

The trial court dismissed the complaint, finding that nothing in the deed restrictions prohibited the use of the property for rental of single family dwellings.

On appeal: held: Affirmed. The appeals court cited language indicating that in Ohio restrictions on the use of land shall be read narrowly where necessary to preserve utility and, thus, alienability. Only clear statements of restrictive intent will be upheld. A prior Ohio case had found a violation of similar covenant language where an owner had built a 17 room building with separate apartments for short term tenants. Although the court admitted that the premises were applied to "residential use," the court held that the owner was engaged in a "commercial" use in his rental of the various units. In that case, unlike this one, the covenants contained a specific prohibition of "commercial" use. The Association advanced this case as binding authority. The court of appeals ruled that, although rental of a number of residential units in one structure was "commercial," rental of only one unit to one family was not. It didn't say why. Further, it appeared to assume that a "commercial use" was a "non residential" use even when the covenants did not prohibit commercial uses specifically.

The trial court had not addressed the use of the common areas or rule on the claim for 1994 assessments. The appeals court remanded to determine inter alia whether renters' use of the common areas violated the deed restrictions.

Comment 1: There was some argument for estoppel here, as the owners had informed the association president of their intent to rent prior to building the homes, and he said nothing about the restrictions, although he believed at the time that they would be violating the restrictions. But the court took the more straightforward approach of interpreting the restrictions directly.

Comment 2: The court's construction of the "residential only" language is not unusual, at least in states inclined to read servitude language narrowly as a restriction on alienability. It would be an anomalous result, of course, if the court on remand determined that homeowners could rent their homes but that the renters could not use the common facilities to the same degree that the owners could if they occupied the home. Clearly the burden on the association from the use by single family use renters is difficult to distinguish from use that might be made by owners.

But note that the restrictions on use of the amenities, unlike those relating to the lots themselves, did specifically prohibit "commercial" usage. Further, note that the Owners would be authorizing as many as three different tenants to use the amenities, which is more similar to the usage defined as "commercial" in the precedent case, and unlike what the Owners were doing on the lots, where they authorized only one family per lot.

For a very similar case, see Yogman v. Parrott, 937 P.2d 1019 (Or. 1997) (DD for 9/16/97).

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