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are short term rentals commercial activity in TN?

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jmullinix77

New member
What is the name of your state?TN
My husband and I built a lakehouse. We currently rent it less than 50% of the year. Our restrictions state "no commercial activity". Are we violating this restriction based on our neighborhood covenants. Keep in mind that these covenants are from 1978. Also, there has been long-term and other short term rentals in the neighborhood over the decades. If sued, would we win or lose in court? Best guess?
 


LdiJ

Senior Member
What is the name of your state?TN
My husband and I built a lakehouse. We currently rent it less than 50% of the year. Our restrictions state "no commercial activity". Are we violating this restriction based on our neighborhood covenants. Keep in mind that these covenants are from 1978. Also, there has been long-term and other short term rentals in the neighborhood over the decades. If sued, would we win or lose in court? Best guess?
What is considered to be commercial activity is likely defined in the restrictions. I personally would not define rentals of the lake house as a commercial activity but others might. What is causing the question to arise now? Is someone complaining about your renters?
 

zddoodah

Active Member
Our restrictions state "no commercial activity". Are we violating this restriction based on our neighborhood covenants.
We have no way of knowing. Do the CC&Rs define "commercial activity"? In one sense, anything you do that generates income is "commercial activity." However, in the context you mentioned, it may be that the concern is that folks not operate businesses from the homes (e.g., repairing cars on the property).
 

adjusterjack

Senior Member
Keep in mind that these covenants are from 1978.
Doesn't matter how old they are. They are still binding.

Also, there has been long-term and other short term rentals in the neighborhood over the decades.
The "others do it" is not really a defense if neighbors want to put a stop to it now.

If sued, would we win or lose in court?
No way to predict. Either way, however, you would likely spend thousands on an attorney.

You need to nail down the definition of "commercial activity."
 

FarmerJ

Senior Member
when you mentioned others having done it what have you gathered over the years would be able to prove those property owners had rented out their properties ? ( for your own records )
 

quincy

Senior Member
Asking the other property owners you know who have rented out their homes in the past could be a way to tell how the neighborhood covenants define commercial activity - unless the other property owners paid no attention to the covenants (which is a good possibility) and just rented their property anyway.
 

xylene

Senior Member
HOW are you renting the property? Like handshake deal? a simple contract between yourself the other party?

If you are using / forming / operating an LLC or other commercial entity to rent the the property or have a property manager, that is clearly veering into the covered commercial activity of the clause. I would suspect that could also cover renting on AirBnB - IF the community was inclined to crack down. AirBnB brings a lot of negative attention.

Scale of the activity matters too. How many time a year are you renting the place and to how many people and different groups. How much money are you charging and how much profit are you making? That's part of how visible you operation and it falling under the clause as a commercial operation.

And the practical details of your short term renting: I mean are you running a mini-hotel to randos or are you renting your property to the same couple for June and July and have rented to them for the last 8 years and they are good people liked by the community... One of those is going to draw much more ire and strictness than the other.
 

izzie02

Active Member
Do you own the land? Is it a land lease with the state or federal that has such restrictions? Is it a association? Is there a board that enforces restrictions?
 

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