Santa Monica Beach Prop. Owners Ass'n, Inc. v. Acord

• Decision Date: 28 April 2017
• Docket Number: CASE NO. 1D16–4782
• Citation: 219 So.3d 111
• Parties: SANTA MONICA BEACH PROPERTY OWNERS ASSOCIATION, INCORPORATED, Joe Bailey, Lew James, Cindy Dood, Janet Dick–Grace, Adrian Holman, Joyce Hoskins, John Hunter, Mark Jamison, Barbara Ramlow, Gary Salter, Steve Sanders, and Bob Whitson, Appellants, v. David ACORD and Wife, Virginia Acord, and William C. Alford, Appellees.
• Court: Florida District Court of Appeals

219 So.3d 111

SANTA MONICA BEACH PROPERTY OWNERS ASSOCIATION, INCORPORATED, Joe Bailey, Lew James, Cindy Dood, Janet Dick–Grace, Adrian Holman, Joyce Hoskins, John Hunter, Mark Jamison, Barbara Ramlow, Gary Salter, Steve Sanders, and Bob Whitson, Appellants,
v.
David ACORD and Wife, Virginia Acord, and William C. Alford, Appellees.

CASE NO. 1D16–4782

District Court of Appeal of Florida, First District.

Opinion filed April 28, 2017
Rehearing Denied May 12, 2017

Jeffrey P. Whitton, Panama City, for Appellants.

Robert L. Kauffman of Dunlap & Shipman, P.A., Santa Rosa Beach, for Appellees.

WETHERELL, J.

The Santa Monica Beach Property Owners Association and the members of its board of directors (collectively "the Association") appeal the order dismissing the declaratory judgment action in which they alleged that the use of Appellees' properties as short-term vacation rentals violates the covenants restricting the properties' use to residential purposes only and prohibiting their use for business purposes. We affirm.

Factual and Procedural Background

Appellees own two properties¹ in the Santa Monica Beach subdivision in Bay County. The properties are subject to restrictive covenants which provide in pertinent part:

219 So.3d 113

Said land shall be used only for residential purposes , and not more than one detached single family dwelling house and the usual outhouses thereof, such as garage, servants' house and the like, shall be allowed to occupy any residential lot as platted at any one time; nor shall any building on said land be used as a hospital, tenement house, sanitarium, charitable institution, or for business or manufacturing purposes nor as a dance hall or other place of public assemblage.

(emphasis added).

In December 2015, the Association sent letters to Appellees stating that "it has been observed that the primary use of your property during 2015 seems to have become VACATION RENTAL; advertised on VRBO^{[2 ]}." The letters asserted that this use violated the restrictive covenants and requested that Appellees discontinue the "vacation rental business" on their properties by March 2016. The record does not reflect whether Appellees responded to these letters.

Thereafter, in July 2016, the Association filed a complaint for declaratory judgment alleging that Appellees' use of their properties violates the restrictive covenants quoted above. Specifically, the complaint alleged that Appellees' properties were being offered and advertised for rent on the internet as transient public lodging establishments;³ that Appellees were required to collect and remit state sales tax and local bed tax on the rentals; and that the Acords had obtained a license to operate their property as a transient public lodging establishment under the name "Acord Rental."

Appellees filed a motion to dismiss the complaint for failure to state a cause of action because the uses alleged in the complaint do not violate the restrictive covenants. Specifically, Appellees argued that the short-term vacation rentals were residential uses—and not business uses—because the renters were using the properties for residential purposes: "Critically, the [Association] ha[s] not alleged that the properties are being rented for any purpose other than residential use by residential tenants. ... [T]he fact that this use is residential in character, and not a commercial or ‘business' use, is conclusively established by the fact that [the Association] repeatedly refer [s] to Florida's statute concerning ‘public lodging ,’ lodging being an inherently residential use of a dwelling" (emphasis in original).

The trial court agreed and dismissed the complaint.⁴ The court reasoned that "[t]he critical inquiry is not the duration of the

219 So.3d 114

tenancy, but the character of the actual use of the property by those residing thereon." Additionally, the court explained that because the proper focus is on "the actual use which is undertaken on the property," the nature of the properties' use is not transformed from residential to business simply because the properties may be subject to a regulatory scheme that requires licensure and Appellees may earn income from the rentals. Finally, the court noted that because the restrictive covenants are silent on the issue of short-term rentals, any ambiguity as to whether that use is permitted must be resolved in favor of Appellees' free and unencumbered use of their properties.

This appeal follows.

Analysis

Our review of the dismissal order is de novo. See Genesis Ministries, Inc. v. Brown , 186 So.3d 1074, 1076 (Fla. 1st DCA 2016) ("We review the dismissal order under the de novo standard of review because the question of whether a complaint should be dismissed is a question of law. And, like the trial court, our review is confined to the well-pled allegations in the complaint and its attachments.") (citation omitted).

The specific issue in this appeal—whether short-term vacation rentals violate restrictive covenants requiring property to be used only for residential purposes and prohibiting its use for business purposes—appears to be a matter of first impression in Florida. See generally William P. Sklar & Jerry C. Edwards, Florida Community Associations Versus Airbnb and VRBO in...