Association Wins Short-Term Rental Case

The owners in a Kentucky subdivision came out on the wrong side of a court case over their use of their property for short-term rentals.

Although the community association wasn’t involved in the litigation, the ruling sheds some light on the arguments associations can expect when trying to block short-term rentals in court — and how they can overcome such arguments with carefully crafted restrictions.

The lawsuit was filed by a trust that owns three lots in the Sledd Creek Subdivision in Gilbertsville, Ky. The Marshalls, the defendants in the case, also own a lot in the subdivision but reside in Paducah.

After they purchased the property, the Marshalls established an LLC to rent it. They advertised the property as a short-term vacation rental on Airbnb, Vacation Rental By Owner (better known as VRBO), and HomeAway.com. The Marshalls rented the property 233 of the first 328 days they owned it, never for more than seven nights at any one time.

The trust sued the Marshalls, alleging violations of association restrictions. The trial court found in the Marshalls’ favor, emphasizing the fact that the deed didn’t prohibit renting.

The trust appealed, relying on the Kentucky Supreme Court’s ruling in a similar case that came out after the trial court’s decision. In both cases, the restrictions permitted rentals but limited use to residential purposes.

To learn the key’s to the associations’ victories in the two cases, and how they can help your clients restrict short-term rentals read our new article, Court Finds Short-Term Rentals Violate Deed Restriction.

Best regards,
Matt Humphrey
President