Vacation Rentals Are Residential Use Santa Monica Beach Property Owners Association, Incorporated v. Acord, No. 1D16-4782 (Fla. Ct. App. Apr. 28, 2017) Use Restrictions: The Florida Court of Appeal held that short-term rentals did not violate a restriction prohibiting commercial use. Santa Monica Beach Property Owners Association, Incorporated (association) governed the Santa Monica Beach subdivision in Bay County, Fla. David and Virginia Acord and William Alford (collectively, the owners) owned two homes in the subdivision. In December 2015, the association notified the owners that they were violating the subdivision’s restrictive covenants because their properties appeared to be primarily used for vacation rentals and were advertised on the Vacation Rentals by Owner (VRBO) website. The association asked the owners to cease vacation rentals by March 2016. Under the restrictive covenants, the properties could be used only for residential purposes, and no business use was allowed. The association sued the owners in July 2016, asserting that the properties were being rented as transient public lodging, that the owners had obtained a business license under the name "Acord Rental" to operate a rental business, and that the owners were required to collect state and local taxes on the rentals. The owners responded that they were not violating the restrictive covenants because their renters were using the properties for residential purposes. The trial court agreed and dismissed the case, reasoning that the proper focus was the actual use undertaken on the property. The trial court held that the fact that the short-term rental activity required a business license and that the owners earned income from the use did not transform the use from residential to commercial. Further, since the restrictive covenants were silent about short-term rentals, such ambiguity had to favor the free use of the property. The association appealed. The appeals court determined that using a home for eating, sleeping, and other residential uses constituted residential use, no matter how short the duration of the renter’s occupancy. The critical issue is whether the renters are using the property for ordinary living purposes, not the rental term. The appeals court also agreed with the trial court that the fact that the units were operated as part of a rental business did not convert the occupancy to commercial use. Further, the omission of an explicit prohibition on short-term rentals meant that the restrictive covenants must be construed in favor of free and unrestricted use of the property. The need for explicit language is particularly important where the use in question is common and predictable, such as renting houses near the beach as vacation rentals. Accordingly, the trial court’s judgment was affirmed.