Property rights are paramount. That’s one of the key takeaways from a new Texas Supreme Court decision involving short-term rentals (STRs).
In Tarr vs. Timberwood Park Owners Association Inc., the high court ruled in favor of Kenneth Tarr, a San Antonio-area homeowner-turned-STR-owner whose plan to earn a little extra money landed him in hot water with his homeowners’ association.
Shortly after purchasing his home in 2012, Tarr’s job moved to Houston and he followed. Instead of selling the property, Tarr turned it into an STR and began marketing it on sites like VRBO. This didn’t sit well with the homeowner’s association, which argued that Tarr was violating his deed restrictions, which specified: “All tracts shall be used solely for residential purposes.”
Tarr countered that his activities were residential in nature, since his visitors ate, slept, prayed and generally did things that ordinary occupants do in a home. The homeowner’s association didn’t buy it. Instead, it insisted that the house was being used for “business purposes,” adding that Tarr paid the hotel occupancy tax and that he’d formed an LLC to help manage the property.
Eventually, the homeowner’s association began fining Tarr $25 per day for not following their rules, setting off a long-running legal battle that ultimately made it all the way to the Texas Supreme Court.
Once the dispute got to the high court however, the issue was not nearly as contentious.
The court unanimously found that: “So long as the occupants to whom Tarr rents his single-family residence use the home for a ‘residential purpose,’ no matter how short-lived, neither their on-property use nor Tarr’s off property use violates” the deed restrictions. Furthermore, Tarr’s use of his home as an STR “does not qualify as a commercial use” since no business activity took place on the lot itself.
That rather unambiguous ruling came as little surprise to those paying attention.
Around the country, other courts, like those in Alabama and Idaho, have reached similar conclusions. Moreover, Texas courts themselves have plainly stated: “‘[t]he right of individuals to use their own property as they wish remains one of the most fundamental rights that individual property owners possess.” And so, if anything, the court’s latest decision was simply a natural outgrowth of things.
For advocates of limited government, the Tarr decision comes as welcome news. Not only because it affirms property rights in this instance, but because those same principles might also be applied elsewhere, too. Like the Texas Public Policy Foundation’s STR lawsuit against the city of Austin, for example.
In 2016, the city of Austin adopted one of the nation’s most aggressive approaches to regulating STRs. To say that it tramples Austinites’ constitutionally-protected rights is an understatement.
Among other things, Austin’s new regulations require renters to be asleep by 10 p.m., prohibit certain types of gatherings, and force people to submit to warrantless searches carried out by code enforcement officials. By 2022, the city will also ban some STRs altogether.
The ordinance is such an overreach and the city’s approach so egregious that the Foundation filed suit in 2016 to upend it. The case is now pending before the Third Court of Appeals in Austin. And while the merits of the case were rock solid before, they are even better considering the Tarr decision.
The high court’s ruling not only removed some of the legal footing that Austin had relied on, such as the distinction between residential and commercial use, but it may also signal a favorable environment for the foundation’s pro-property rights arguments.
Of course, it’s all just speculation at this point; but it’s easier to envision a positive outcome for property owners than not.
In rightly deciding Tarr v. Timberwood Park Owners Association, Inc., the high court made it clear that an individual’s property rights are not to be trifled with. That principle is true no matter whether the aggressor is an HOA or a city government.