Adams v. Kimberly One Townhouse Owner’s Association, Inc.

In 1980 declarations of covenants, conditions, and restrictions were recorded against the Kimberly One Townhouse Subdivision. The covenants contained a provision stating that the lots within the subdivision were for single-family residential purposes only on either an ownership, rental, or lease basis. The covenants also provided that they could be amended at any time. In 2003 J. Virgil Adams (plaintiff) purchased a townhome in the subdivision subject to the 1980 covenants. During his ownership, Adams rented out the townhome in various capacities. In 2012 the Kimberly One Townhouse Owner’s Association (the association) (defendant) began receiving complaints about Adams’s short-term renters. In 2013 the association amended the covenants to impose conditions on rentals, including a prohibition on rentals of less than six months’ duration. The association also established house rules imposing a $300 fine for each day of unauthorized rental and $100 for each day of unauthorized advertising. Adams continued to rent out his townhome on a short-term basis, and the association issued a notice of violation. Adams filed suit, seeking a declaratory judgment invalidating the amendment because the restrictions did not reflect the intent of the parties to the original 1980 covenants. Adams asserted that because the 1980 covenants contained an unrestricted right to rent out property, they must be construed toward the free use of land. Adams also asserted that the restrictions allowed for arbitrary and discretionary enforcement. The association moved for summary judgment, and Adams filed a cross-motion for summary judgment. The district court granted summary judgment in favor of the association. Adams filed an appeal, asserting that the 1980 covenant’s statement that they could be amended only applied to the creation of a new burden and that the association could not amend its covenants to change to an existing right.