Monday, October 17, 2011

Yogman v. Parrott: Oregon Supreme Court rules in favor of Vacation Rentals

In 1997 the Oregon Supreme Court upheld a lower court decision which stated that:
  a)  rental of a vacation home by a family to other people did not violate restrictive covenants that required that the home be used for "residential" purposes, and
  b)  the practice of renting a vacation home does not constitute a "commercial" activity.

The home is located in Lincoln County, Oregon


Plaintiffs and defendants own houses in Miracle View Annex, a beachfront subdivision in Lincoln County. All of the lots in the subdivision are subject to a set of restrictive covenants that were recorded in 1963. When defendants are not occupying their vacation home, they rent it on a short-term basis to groups of up to 10 people. Reservations and payments are made through a third party. Plaintiffs filed a complaint seeking a declaration that defendants' rental activity violates a restrictive covenant that provides:

         "All lots within said tract shall be used exclusively 

         for residential purposes and no commercial 
         enterprise shall be constructed or permitted on 
         any of said property."

The issue in this case is whether the short-term rental of a home within the subdivision constitutes a nonresidential purpose or a commercial enterprise, either of which is a violation of the covenant.

Plaintiffs assert that "[t]he acceptance of a fee in exchange for daily or weekly stays at [the home] is not a residential purpose" under the covenant. We disagree. Whether or not defendants receive a rental fee is not the determinative factor, because the "residential purpose" clause of the restrictive covenant controls the manner in which the property is used. Although the renters pay to occupy defendants' home, they are using the home for residential purposes. Plaintiffs do not assert, nor does the evidence indicate, that defendants' home, when rented, is used for any nonresidential purposes.

...defendants' practice of renting their vacation home on a short-term basis through a third party is not a commercial enterprise. Defendants' home is not open to the public for on-site rental, such as a motel, nor is it advertised as a rental by signs on the property. The maximum number of renters and vehicles allowed at any one time appears to be reasonable given the size of the home. What occurs on defendants' property is not any greater infringement on the residential character of the subdivision than would occur with a large family that regularly visited its own vacation home. The only distinction is that defendants receive a fee for the use of their home. Under the covenants involved in this case, that alone is not enough to constitute a commercial enterprise.

Read the Oregon Supreme Court Decision here ...

Read more about the Court of Appeals Decision here ....


  1. I've heard that vacation rentals in Portland, OR were technically illegal. Does this ruling change anything?

  2. Vacation Rentals are allowed in the Portland area, but qualifying to have one is more difficult than it is in many other areas. I don't know of anyone who is contesting the current laws that control vacation rentals in Portland, OR. If you have an interest in doing so, let me know. This ruling could be a factor in contesting such a law.


Thoughtful comments are welcome, whether you are in favor of vacation rentals or concerned about the impacts of VRs on your community. Comments that contain advertising, including ads for properties, will be deleted.