One of the most common restrictions found in the governing documents of a homeowners association is that individual property be used only for “residential purposes.” Similar to how a picture is worth a thousand words, residential use can encompass a broad array of ideas and uses.
In one recent case out of Nevada, an HOA adopted a rule aimed at clarifying the residential use in their community.
NOTE: This is a case from Nevada and has no precendential value in North Carolina or South Carolina. However, important lessons may be gleaned from it.
Homeowners in the Cold Canyon Homeowners Association in Clark County, Nevada, were using lots for stables or horse corrals and operating a non-profit horse sanctuary containing about 20 animals.
The Board adopted a rule, pursuant to their restrictive covenants and state law, requiring that livestock could be maintained only if not for commercial purposes and only as an ancillary use of the lot for residential purposes. The rule required that a home first be constructed on the lot.
The homeowners, who had not constructed a home at all, and were keeping horses on the lots, sued the Association. They argued that the rule was improper because it was inconsistent with the covenants and required them to construct a home on the lot, which they believed was not required under the governing documents. They also argued that the rule was improper because the Board was without authority to adopt a rule of that nature.
The trial court granted summary judgement to the Association and the homeowners appealed.
The Nevada Court of Appeals determined that the Association had authority to adopt the rule under both the restrictive covenants and state law. It also held that the rule was permissible because it clarified the restrictive covenant by reiterating that owners must use or develop lots for residential purposes—and that other uses are ancillary to that overriding requirement. Requiring an owner to construct a residence, thus demonstrating residential use of the property, was a valid prerequisite to then using the property for other ancillary uses—such as for keeping horses.
Similar to the issue in this case, I often get complaints and questions from communities wanting to know whether they can prevent certain types of activities because they are operating a business, selling things, working from home, or otherwise commercial in nature. While there may be local ordinances that come into play, the starting point for it all is the residential use restriction. Associations that can show that their rules are geared toward residential use may be better situated to enforce them.
If you or your community has questions about what types of uses may be prohibited in an HOA, contact a North Carolina or South Carolina attorney in any of our offices.