Do Your Association’s Covenants Actually Restrict Short-Term Rentals
Quick Summary
Not every HOA covenant that appears to restrict short-term rentals actually does. Under Pennsylvania law, property restrictions must be strictly construed and expressly stated, and a “single-family dwelling” restriction is a building restriction, not a limit on rental use. This article explains how Pennsylvania courts distinguish building from use restrictions, why Slice of Life does not apply to private community associations, and how STR owners may challenge an unenforceable HOA restriction. Contact Eric B. Smith at Timoney Knox to review your association’s covenants.
All home owner associations operate under a central set of restrictions, typically as a series of deed restrictions, or covenants, or a declaration, or some combination (“Covenants”). These Covenants may provide for many things, from definitions, to voting rights, beach or boating access, lake rights, tree protection, and building and use restrictions. The key to understanding your right to engage in Short-Term Rentals (“STRs”) relative to your association is found primarily within these Covenants, particularly, the use restrictions.
The Difference Between Building and Use Restrictions
Under Pennsylvania law, building restrictions govern the physical characteristics of a structure, its size, style, materials, or type, while use restrictions govern how a property may be used. A “single-family dwelling” restriction is a building restriction, not a use restriction, and does not by itself prohibit short-term rentals. Chan v. Ass’n of Prop. Owners of the Hideout, Inc., 323 A.3d 92 (Pa. Commw. Ct. 2024).
Oftentimes there is a misunderstanding, or misapplication of the law, if certain language is a building restriction or a use restriction. Associations frequently attempt, knowingly or not, to twist a building restriction into a use restriction. Further, any property restriction must be strictly construed because they are disfavored by the law and as a matter of policy. Such restrictions are construed against the party seeking to enforce the restriction. Because of the strict construction of restrictions on real estate, such restrictions must be expressly stated, not implied. Restrictions must always be in writing and must be found in the Covenants, not in a mere bylaw or rule and regulation.
A building restriction is language that regulates the size of a building, or its location, style, architecture, materials, and other construction related matters, but also including the type of building. For instance, this language is an example of a building restriction: “Only one single-family dwelling unit may be built on a Lot.”
On the other hand, there are use restrictions. A use restriction identifies, or limits, the uses to which a property may be put. Use restrictions include residential, or commercial, uses or single family, or multi-family, uses or a church, or dentist, or other specific types or categories of businesses, or uses. A use restriction could also specifically limit rental rights. Such a limitation must be explicit, not implied. A court will use the definition of a word, that is, its plain meaning, within a Covenant’s restrictions if it is undefined or otherwise ambiguous.
Many associations continue to incorrectly correlate the Pennsylvania Supreme Court public municipal zoning case, Slice of Life, with the private real estate Restrictions that actually govern them. Slice of Life is wholly inapplicable to association restrictions. The law of real estate restrictions is one akin to private relationships and private property. The law of zoning involves governmental police power and the power to develop zoning districts with distinct attributes, such as a residential zone. That is not the purpose of private real estate restrictions.
Frequently, in an association, the Covenants regarding use restrictions could state something like the following or some form of variation:
“The premises hereby conveyed shall be used for only one private single-family dwelling for residential purposes only. Private garages in harmony with the main buildings may be erected.”
In this example, STRs meet the use restriction as a “residential purpose.” The phrase “single-family dwelling” is a building restriction, not a use restriction. A dwelling is a structure. A single-family dwelling is a type of dwelling, for instance, as opposed to, for example, a multi-family dwelling. Even if couched as a use restriction, the law will see through the restriction and interpret it as the building restriction that it is. Chan v. Ass’n of Prop. Owners of the Hideout, Inc., 323 A.3d 92 (Pa. Commw. Ct. 2024) explains that the definition of “single-family dwelling” pertains solely to the physical aspects of the building, not its use.
How to Challenge an Unenforceable HOA Restriction on Short-Term Rentals
An STR owner who believes an HOA restriction is unenforceable should first have counsel review the covenants to confirm the restriction’s scope. If the covenants do not actually prohibit STRs, a demand letter to the association is often the first step. If the association refuses to withdraw enforcement, a declaratory judgment action in the Pennsylvania Court of Common Pleas can resolve whether the restriction applies.
You should consult with an attorney to review your association’s Covenants to determine if STRs are actually restricted or prohibited. If the Covenants do not limit or prohibit STRs, then, if a written demand letter by counsel to the association fails, you may be able to file a declaratory judgment action with the Court of Common Pleas. Such an action asks the Court to determine whether or not the Covenant’s restriction does, or does not, restrict or prohibit STRs. In a proper case, there is an automatic and immediate right to appeal to the appellate courts if the local county Court denies the declaration.
NOTE: Bylaws and rules and regulations may not impose restrictions more stringent than the Covenants. Any such bylaw or rule and regulation is void.
Frequently Asked Questions
Do HOA bylaws or rules and regulations have the same force as covenants?
No. Bylaws, rules, and regulations may not impose restrictions more stringent than the association’s covenants, deed restrictions, or declaration. Any bylaw or rule that attempts to do so is void. STR restrictions must be found in the covenants themselves, not in a bylaw or rule promulgated by the board.
What kind of covenant language actually restricts short-term rentals?
To restrict short-term rentals, a covenant must explicitly limit rental use. General references to “residential purposes” or “single-family dwelling” do not, without more, prohibit short-term rentals. Restrictions on rental use must be express and stated in the covenants, not implied from unrelated language.
How do Pennsylvania courts interpret property restrictions?
Property restrictions are strictly construed by Pennsylvania courts and construed against the party seeking to enforce the restriction. Restrictions must be express, in writing, and found in the covenants. Any ambiguity is resolved in favor of the free use of property.
Does the Pennsylvania Supreme Court’s decision in Slice of Life allow my HOA to ban short-term rentals?
No. Slice of Life is a municipal zoning case that interpreted a public zoning ordinance. It does not apply to private community associations or the interpretation of covenants and deed restrictions. Zoning law and private property restrictions are governed by separate bodies of Pennsylvania law. Our related article, [The Slice of Life Myth Debunked](link to Article 7), explains the case’s actual holding and why so many associations misapply it.
What happens if the trial court rules against me in a declaratory judgment action?
In a proper case, a declaratory judgment ruling from the Pennsylvania Court of Common Pleas carries an automatic and immediate right of appeal to the appellate courts. This can be a meaningful procedural feature in matters involving disputed covenant interpretation.
If my covenants do not prohibit short-term rentals, can my association still charge me a fee to operate one?
Only to the extent the fee reflects the actual cost of administering the community’s rental program. Any portion of an STR fee that exceeds administrative cost — or that funds general community expenses through an STR-only charge — may be an improperly assessed common expense under the Pennsylvania Uniform Planned Community Act. See our related article on [limitations on association short-term rental fees](link to Article 8).
If you are facing a dispute involving short-term rental rights, association restrictions, municipal regulations, or rental fees, Eric B. Smith can help evaluate your legal options. As Chair of the Litigation Group at Timoney Knox LLP in Fort Washington, Pennsylvania, Eric focuses on real estate, municipal, and commercial litigation matters throughout Pennsylvania. To discuss your situation, contact Eric directly at esmith@timoneyknox.com or 215.540.2653.
