Present: All the Justices
WILLIAM D. SCOTT, ET AL.
v. Record No. 061410 OPINION BY JUSTICE CYNTHIA D. KINSER
June 8, 2007
DONALD F. WALKER, ET AL.
FROM THE CIRCUIT COURT OF BEDFORD COUNTY
James W. Updike, Jr., Judge
In this appeal, we decide whether a restrictive
covenant stating that certain real property “shall [not] be
used except for residential purposes” prohibits the short-
term rental of a single-family dwelling. Because we find
the restrictive covenant ambiguous, we construe it in favor
of the free use of land and will therefore reverse the
judgment of the circuit court enjoining the nightly and
weekly rental of the property at issue.
FACTS AND PROCEEDINGS1
William D. Scott and Suzanna C. Scott own certain real
property situated in the Smith Mountain Lake resort area of
Bedford County. Their property is designated as lot 53 in
section 2 of the Harbor Village Subdivision. The Scotts
acquired their property in May 2003, and their deed recites
that the conveyance is subject to, among other things, all
restrictions affecting the property. Donald F. Walker and
Charlotte O. Walker own lots 66 and 67 in section 2 of the
1
The parties stipulated to the relevant facts.
same subdivision. The Walkers’ lot 67 and the Scotts’
property share a common boundary line.
Section 2 of the Harbor Village Subdivision is subject
to certain restrictive covenants that were recorded in the
clerk’s office of the Circuit Court of Bedford County in
1979.2 The following restrictive covenant concerning use of
the lots is at issue in this appeal:
LAND USE AND BUILDING TYPE: No lot shall be used
except for residential purposes. No building shall be
erected, altered, placed or permitted to remain on any
lot other than one detached single-family dwelling not
to exceed two and one-half (2 1/2) stories in height,
a private garage for not more than two cars, boat dock
and boat houses. No lot or lots in said subdivision
can be re-subdivided except a lot may be subdivided
providing each part is allotted to an adjoining lot.
By letter dated April 9, 2003, the trustees for Harbor
Village Subdivision provided a copy of the restrictive
covenants to the Scotts.
Sometime after acquiring their property, the Scotts
began leasing their single-family dwelling on a nightly and
weekly basis. In March 2004, the Walkers filed a bill of
complaint seeking to enjoin the Scotts from doing so. The
Walkers alleged that the short-term rental of the Scotts’
property violated the restrictive covenant prohibiting use
of the lot “except for residential purposes.” Upon
2
The trustees of the subdivision restated the
restrictive covenants in 2004.
2
considering the parties’ stipulation of facts, memoranda,
and oral argument, the circuit court granted injunctive
relief to the Walkers and enjoined the Scotts “from nightly
and/or weekly rentals of their real property in the Harbor
Village Subdivision.” The circuit court reached the
following conclusions:
[(1) T]he plain and ordinary meaning of the term
“residential purposes” encompasses both a type of use
and duration of use . . . ; (2) “Residence” means more
than mere physical presence and less than domicile;
(3) [A] strict construction of the covenant
prohibiting lots from being used “except for
residential purposes” excludes rental of the real
property on a nightly or weekly basis; and (4) [T]he
lease/rental of the real property on a nightly or
weekly basis is not a use for “residential purposes”
and thus, violates the restrictive covenant
prohibiting lots from being used “except for
residential purposes.”
This appeal by the Scotts ensued.
ANALYSIS
The question before us is whether the restrictive
covenant stating that “[n]o lot shall be used except for
residential purposes” prohibits rental of the subject
property on a nightly and/or weekly basis. The facts are
not in dispute. The circuit court’s interpretation of the
restrictive covenant is, however, a question of law, which
we review de novo. Turner v. Caplan, 268 Va. 122, 125, 596
S.E.2d 525, 527 (2004).
3
When, as in this case, the interpretation and
enforcement of a restrictive covenant concerning real
property is at issue, we are guided by certain legal
principles:
It is . . . the general rule that while
courts of equity will enforce restrictive
covenants where the intention of the parties is
clear and the restrictions are reasonable, they
are not favored, and the burden is on him who
would enforce such covenants to establish that
the activity objected to is within their terms.
They are to be construed most strictly against
the grantor and persons seeking to enforce them,
and substantial doubt or ambiguity is to be
resolved in favor of the free use of property and
against restrictions.
Schwarzschild v. Welborne, 186 Va. 1052, 1058, 45 S.E.2d
152, 155 (1947); accord Waynesboro Village, L.L.C. v. BMC
Properties, 255 Va. 75, 80, 496 S.E.2d 64, 67–68 (1998);
Bauer v. Harn, 223 Va. 31, 39, 286 S.E.2d 192, 196 (1982);
Jernigan v. Capps, 187 Va. 73, 78, 45 S.E.2d 886, 889
(1948). “However, if it is apparent from a reading of the
whole instrument that the restrictions carry a certain
meaning by definite and necessary implication, then the
thing denied may be said to be clearly forbidden, as if the
language had been in positive terms of express inhibition.”
Bauer, 223 Va. at 39, 286 S.E.2d at 196 (citing Friedberg
v. Riverpoint Bldg. Comm., 218 Va. 659, 665, 239 S.E.2d
106, 110 (1977)).
4
The Walkers argue that the term “residential purposes”
is not ambiguous and that this Court has historically
defined the terms “residential” and “residence” to
encompass a “duration of time” element. Continuing, the
Walkers distinguish a residential use from a temporary or
transient use and assert that the Scotts’ nightly and/or
weekly rental of their lot falls into the latter category
and, thus, violates the restrictive covenant at issue. In
urging this Court to affirm the circuit court’s judgment,
the Walkers do not rely on the Scotts’ receipt of rental
income as a basis for challenging the Scotts’ use of their
lot.
The Scotts, however, assert that the restrictive
covenant neither expressly nor by necessary implication
prohibits the short-term rental of their lot in Harbor
Village Subdivision. They point out that the restrictive
covenant is actually silent as to the rental or lease of
real property and argue that any lease of their lot,
regardless of its length, is a residential use of their
property. The Scotts further contend that the phrase
“residential purposes” is ambiguous and that the circuit
court erred by considering “duration of use” as a factor in
determining what constitutes “residential purposes.”
Finally, they contend that, if the developer had intended
5
to prohibit short-term rentals of the lots in Harbor
Village Subdivision, specific language to that effect could
easily have been included in the restrictive covenants.
Both parties cite several decisions from other
jurisdictions in support of their respective positions.
Compare Yogman v. Parrott, 937 P.2d 1019, 1023 (Or. 1997)
(short-term rental of lot did not violate restrictive
covenant requiring that the lot “be used exclusively for
residential purposes”), with O’Connor v. Resort Custom
Builders, Inc., 591 N.W.2d 216, 220–21 (Mich. 1999)
(interval ownership in a home violated restrictive covenant
prohibiting use of a lot “except for residential
purposes”). They also discuss several of this Court’s
decisions that they agree are not directly on point. Our
prior decisions, however, are instructive. We turn now to
those cases.
First, in Deitrick v. Leadbetter, 175 Va. 170, 8
S.E.2d 276 (1940), the restrictive covenant at issue stated
that certain property “shall not be used except for
residential purposes.” Id. at 173, 8 S.E.2d at 277. The
owner admitted that she bought her home with the intention
to use it as a tourist home, not as a private residence,
and did in fact use it for that purpose. Id. The home
contained four tourist bedrooms, along with a dining room
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and kitchen, in which the owner and her family lived. Id.
We affirmed the trial court’s judgment enjoining the
owner’s operation of a tourist home because it could not be
“seriously questioned” that she was operating a business.
Id. at 174, 8 S.E.2d at 278. Thus, we concluded that, “if
it is a business, then this lot is not being used for
‘residential purposes.’” Id. We further noted that
“[b]oarding houses are not private residences, and, on
principle, it makes no difference if the boarder stays one
day or two.” Id. at 175, 8 S.E.2d at 278. We agree with
the Scotts’ observation that the critical factor in
Deitrick was the owner’s use of her home as a business, not
the length of her boarders’ stays.
Next, in Schwarzschild, the owner rented rooms in her
home to others, but she did not furnish meals to her
boarders. 186 Va. at 1054–55, 45 S.E.2d at 153–54. The
question before the Court was whether such use of the
owner’s home violated a restrictive covenant requiring that
“there shall not be erected more than two dwellings” and
that “such improvements shall be a dwelling or two
dwellings.” Id. at 1057, 45 S.E.2d at 154–55. In
answering that question, we first pointed out that the
restrictive covenant did not expressly prohibit the owner’s
7
rental of rooms in her house. Id. at 1058, 45 S.E.2d at
155. We then asked these questions:
Is it a necessary implication from the words of
the restriction? Is it clear and not doubtful
that by limiting the building on the lot to a
dwelling or two dwellings, it was intended that
nobody should dwell in the dwelling except the
owner and his family? If that had been intended,
it would have been easy to say so, and it would
not likely have been left to the uncertainty of
inference.
Id.
Since the restrictive covenant did not “limit the use
of the property to ‘a private dwelling,’ or to ‘a single
family dwelling,’ ” we concluded that the owner’s rental of
rooms in her home did not “convert[] the dwelling to a
business use more than does an apartment house.” Id. at
1062–63, 45 S.E.2d at 157. We refused to broaden the
language of the restrictive covenant to include a
prohibition that did not appear “in [its] terms or by
necessary implication.” Id. at 1063, 45 S.E.2d at 157.
We also distinguished the facts in Deitrick, pointing
out that the restriction there was broader and the use was
different. Id. at 1064, 45 S.E.2d at 158. Unlike the
transient guests in Deitrick, the guests in Schwarzschild
expected their stays to last as long as their business
permitted, and the restrictive covenant limited the use of
the property to a dwelling, not to a private residence.
8
Id. at 1064–65, 45 S.E.2d at 158. Referring to the tourist
home in Deitrick, we stated, “A house is not being used for
‘residential purposes’ by tourists who spend the night.”
Id. at 1065, 45 S.E.2d at 158.
Finally, in Jernigan, a one-story, four-family
apartment building was to be erected on a lot subject to
restrictive covenants requiring that “ ‘only one
residential building . . . shall be erected on any lot’ ”
and ‘ “the use of the land shall be restricted to
residential purposes.’ ” 187 Va. at 75–76, 45 S.E.2d at
887–88. The question before the Court was whether the
proposed building violated those particular restrictive
covenants. Id. at 77, 45 S.E.2d at 888. The Court found
no express terms in the restrictive covenants forbidding
“the erection of ‘an apartment house’ or ‘a multiple family
residence.’” Id. at 79, 45 S.E.2d at 889. We further
concluded that the language in the restrictive covenants
did not “prohibit[] by necessary implication the erection
of the proposed building.” Id. We interpreted the
restrictive covenants at issue as having two purposes: to
prohibit “the erection of more than a single building on a
single lot” and to limit “the type of the structure and its
use to that of a ‘residential building.’” Id. at 80, 45
S.E.2d at 889. Since the proposed structure conformed to
9
the first purpose, the only question was whether the
structure was a “residential building.” Id.
In answering that question, we first looked to the
plain and ordinary meaning of the term “residential
building” and stated that “such a building is one which is
used for residential purposes, – that is, one in which
people reside or dwell, or in which they make their homes,
as distinguished from one which is used for commercial or
business purposes.” Id. at 80, 45 S.E.2d at 890. But, we
also considered the definitions of the terms “residential”
and “residence.” Id. In part, the definition of
“residential” was: “ ‘Used, serving, or designed as a
residence or for occupation by residents.’ ” Id. (quoting
Webster’s New International Dictionary, 2d Ed.). The term
“residence” was defined as: “ ‘The place where one
actually lives or has his home; a person’s dwelling place
or place of habitation; an abode.’ ”3 Id. We then
concluded that the building, which was designed to
accommodate four families, was a “residential building” and
3
Today, Webster’s continues to define “residential”
to mean “used, serving, or designed as a residence or for
occupation by residents.” Webster’s Third New
International Dictionary 1931 (1993). The term “residence”
is defined as “the act or fact of abiding or dwelling in a
place for some time; an act or making one’s home in a
place.” Id.
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that the restrictive covenants did not prohibit its
erection. Id. at 83, 45 S.E.2d at 891.
We agree with the Walkers’ observation that a
transient use of the proposed building was not at issue in
Jernigan. In the Court’s view, however, the purpose of the
restrictive covenant “was to confine the use of the
property to residential purposes as distinguished from
business or commercial purposes.” Id. at 82, 45 S.E.2d at
890–91. We quoted with approval the reasoning of the court
in Hunt v. Held, 107 N.E. 765, 766 (Ohio 1914), concluding
that “[i]f a building is used as a place of abode and no
business carried on, it would be used for residence
purposes only when occupied by one family or a number of
families.” Jernigan, 187 Va. at 82, 45 S.E.2d at 890.
In each of these cases, despite the differences in the
respective restrictive covenants, we distinguished the use
at issue from a business or commercial use. See also
Lowden v. Bosley, 909 A.2d 261, 267 (Md. 2006)
(“ ‘Residential use,’ without more, has been consistently
interpreted as meaning that the use of the property is for
living purposes,” and a transitory use does not defeat the
residential status); Mullin v. Silvercreek Condo., Owner’s
Ass’n, 195 S.W.3d 484, 490 (Mo. Ct. App. 2006) (“The plain
and ordinary meaning of ‘residential purposes’ is ‘one in
11
which people reside or dwell, or which they make their
homes, as distinguished from one which is used for
commercial or business purposes.’ ”). Contrary to the
Walkers’ argument, we did not consider the length of the
tenancy as the determinative factor. Even in Deitrick,
where the boarders were clearly transient, we focused on
the owner’s operation of a business, i.e., a tourist home.
In addition, the owners in Deitrick and Schwarzschild were
renting several rooms in their respective homes; whereas,
here, the Scotts are leasing their entire lot and the
single-family dwelling situated on it.
Against the backdrop of our decisions in Deitrick,
Schwarzschild, and Jernigan, we turn now to the question
whether the restrictive covenant before us prohibits the
challenged use. We conclude that it does not. The
restrictive covenant does not by express terms prohibit the
short-term rental of the Scotts’ lot in the Harbor Village
Subdivision. See Bruton v. Wolter, 216 Va. 311, 314, 218
S.E.2d 438, 440 (1975) (restrictive covenant did not
expressly prohibit rental of a guest cottage). In fact,
the restrictive covenant is silent as to leases or rental
agreements. We further conclude that the restrictive
covenant at issue does not “carry . . . by definite and
necessary implication” a prohibition against the Scotts’
12
nightly or weekly rental of their property. Bauer, 223 Va.
at 39, 286 S.E.2d at 196. As the court in Yogman observed,
“if ‘residential’ refers to an intention to live in a home
for more than a temporary sojourn or transient visit, even
[the Scotts’] own use of the property, as well as their
rental use, is not ‘residential.’ ” 937 P.2d at 1021. On
the other hand, those people who rent the Scotts’ property
use it as a temporary place of abode and engage in
activities normally associated with a dwelling place. See
id.
Instead, we find the restrictive covenant, in
particular the phrase “residential purposes,” to be
ambiguous in several respects. See Yogman, 937 P.2d at
1021 (finding term “residential” to be ambiguous). It is
ambiguous as to whether a residential purpose is viewed
only in contradistinction to a business or commercial use;
and, if not so limited, it is ambiguous both as to whether
a residential purpose requires an intention to be
physically present in a home for more than a transient stay
and as to whether the focus of the inquiry is on the
owner’s use of the property or the renter’s use. Indeed,
even the circuit court’s interpretation that the term
“ ‘[r]esidence’ means more than mere physical presence and
less than domicile” is ambiguous. It can be argued that a
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nightly or weekly rental is more than mere physical
presence. Moreover, if the phrase “residential purposes”
carries with it a “duration of use” component, it is
ambiguous as to when a rental of the property moves from
short-term to long-term.
Under our case law, a restrictive covenant of
“substantial doubt or ambiguity” must be interpreted “in
favor of the free use of property and against
restrictions.” Schwarzschild, 186 Va. at 1058, 45 S.E.2d
at 155. If the restrictive covenant at issue was intended
to prevent the short-term rental of lots in the Harbor
Village Subdivision, “it would have been easy to say so,
and it would not likely have been left to the uncertainty
of inference.” Id. In the absence of language expressly
or by necessary implication prohibiting nightly or weekly
rentals, we find that the Scotts’ short-term rental of
their property did not run afoul of the restrictive
covenant at issue. The Walkers did not carry their burden
to establish that the terms of the restrictive covenant
prohibited the activity to which they objected. See
Schwarzschild, 186 Va. at 1058, 45 S.E.2d at 155.
CONCLUSION
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For these reasons, we will reverse the judgment of the
circuit court and enter final judgment in favor of the
Scotts.
Reversed and final judgment.
15