Supreme Court Grants STR Application

We were recently notified that the Tennessee Supreme Court granted our client’s application for permission to appeal in Pandharipande v. FSD, 2022 WL 1280438 (Tenn. Ct. App. Apr. 29, 2022), regarding the banning of owner-occupied short-term rentals (“STRs”) in a Center Hill Lake resort, Four Seasons.?This grant follows a Supreme Court ruling earlier this year in favor of a firm client in Donovan v. Hastings, ___ S.W.3d ___ (Tenn. 2022).?

The issues in Pandharipande have wide-ranging implications for the STR industry in Tennessee and beyond, particularly in resort areas.

In Pandharipande, two lower courts ruled that a dismissal of our client’s lawsuit was proper and granted declaratory relief to the property owners association.?Those rulings regarded whether the POA could either amend their covenants to ban STRs retroactively, or interpret existing generic residential use restrictions to do so.?

In seeking further review from the Tennessee Supreme Court, we identified the following issues: Retroactive banning of STRs in Four Seasons; Generic residential use restrictions somehow prohibiting STRs; Specifically whether Shields Mt. Prop. Owners Ass’n v. Teffeteller, 2006 WL 408050 (Tenn. Ct. App. Feb. 22, 2006), is applicable; Whether the Court of Appeals erred in refusing to review the Trial Court’s ruling on our client’s equitable estoppel arguments?; and, Whether the retroactive amendment grandfathers our client’s use of his lake chalet at Four Seasons for STRs?

The Tennessee Supreme Court granted the application with regard to these issues, and added the following:

1.???????????Whether there are genuine issues of material fact with respect to the application of the 1984 Declaration of Covenants, Conditions, and Restrictions to the property purchased by Plaintiff Pratik Pandharipande in July 2015, in light of this Court’s opinion in Phillips v. Hatfield, 624 S.W.3d 464 (Tenn. 2021), including but not limited to the date on which the 1984 Declaration first was recorded, the ownership on that date of the property which Pratik Pandharipande purchased in July 2015, and whether any of the conveyances in Pratik Pandharipande’s chain of title exhibited an intent on the part of the grantor to impose the 1984 Declaration as a servitude.

2.???????????Whether this Court should limit or reject the analysis and holding of Shields Mountain Property Owners Association, Inc. v. Teffeteller, 2006 WL 408050 (Tenn. Ct. App. 2006), regarding residential purpose or use restrictions or limitations in restrictive covenants.

In particular, the Teffeteller decision is a hot topic, not only in Tennessee, but throughout the country.        

In particular, the Teffeteller decision is a hot topic, not only in Tennessee, but throughout the country.?Indeed, in a few weeks, we will be presenting these issues as part of a continuing legal education forum for the Texas State Bar in Dallas.? As we emphasized in the application, following the Tennessee Court of Appeals’ ruling in Teffeteller, almost every jurisdiction has found that STRs do not violate generic residential purpose/use restrictions.?See Santa Monica Beach Property Owners Association v. Accord, 219 So.3d 111 (Fla. Ct. App. 2017); Forshee v. Neuschwander, 914 N.W.2d 643 (Wis. 2018); Tarr v. Timberwood Park Owners Ass’n, Inc., 556 S.W.3d 274 (Tex. 2018); Houston v. Wilson Mesa Ranch Homeowners Ass’n, 360 P.3d 255 (Col. App. 2015);Wilkinson v. Chiwawa Communities Ass’n, 327 P.3d 614 (Wash. 2014); Estates at Desert Ridge Trails Homeowners’ Ass’n v. Vazquez, 300 P.3d 736 (N.M. Ct. App. 2013);Russell v. Donaldson, 731 S.E.2d 535 (N.C. 2012); Slaby v. Mountain River Estates Residential Ass’n, 100 So.3d 569 (Ala. Civ. App. 2012); Applegate v. Colucci, 908 N.E.2d 1214 (Ind. Ct. App. 2009); Mason Family Trust v. DeVaney, 207 P.3d 1176 (N.M. Ct. App. 2009); Scott v. Walker, 645 S.E.2d 278 (Va. 2007);Craig Tracts Homeowners’ Ass’n, Inc. v. Brown Drake, LLC, 477 P.3d 283 (Mont. 2020); Lowden v. Bosley, 909 A.2d 261 (Md. 2006); Mullin v. Silvercreek Condo. Owner’s Ass’n, 195 S.W.3d 484 (Mo. Ct. App. 2006); Pinehaven Planning Bd. v. Brooks, 70 P.3d 664 (Idaho 2003); Yogman v. Parrott, 937 P.2d 1019 (Ore. 1997); and, Catawba Orchard Beach Ass’n v. Basinger, 685 N.E.2d 584 (Ohio Ct. App. 1996).

As with the Donovan case, we look forward to the opportunity of arguing these issues before the highest court in the State of Tennessee.