On March 7, 2023, the New York Supreme Court (“the Court”) issued its opinion in West Mountain Assets LLC v. Dobkowski, N.Y. Slip Op. 23064 (N.Y. Sup. Ct. 2023), holding that the use of a property for short-term rentals violated a deed restriction limiting use to “single family residential purposes” only, with this opinion also touching upon the issue of co-tenant adverse possession.

Background

The background of this matter involved Plaintiff West Mountain Assets LLC (“Plaintiff”) and Defendants James and Jennifer Dobkowski (“Defendants”), each of whom owned neighboring parcels of land in a subdivision of Warren County, New York, containing single-family residences.  The parties’ deeds to these parcels included restrictions requiring that the properties would: (1) only be used for single family residential purposes; (2) not be used for commercial activity; and (3) not be used for any “noxious, dangerous, offensive or unduly noisy activity of any nature” (“nuisance behavior”).  These two parcels also abutted a third parcel of land containing a road servicing both properties (“the road parcel”), which Plaintiff and Defendants owned as co-tenants.

Subsequent to Plaintiff’s purchase, it began using its parcel as a short-term rental property, renting to tenants for varying lengths of time spanning from a weekend up to multiple weeks.  Plaintiff later brought suit against Defendants for their alleged interference with its tenants' free use of its property, with Defendants counterclaiming for a declaration that Plaintiff’s use of the property for short-term rentals and the alleged nuisance behavior of its tenants violated the deed restrictions.  Defendants also raised an additional counterclaim for adverse possession of a portion of the road parcel.

Defendants ultimately moved for summary judgment on their two counterclaims, with the Court first addressing the claim that Plaintiff’s rentals violated the deed restrictions, focusing on Plaintiff’s “right to rent on ongoing, short-term, repetitive bases to transient, vacationing tenants.”  In doing so, the Court examined the historical construction given to the phrase “single family residential purposes” when such language appeared in a deed or restriction, relying on the matter of White Plains v. Ferraioli, 34 N.Y.2d 300, 304-06 (1974), in which it was held that “a single-family use [was] one that ‘bears the generic character of a family unit as a relatively permanent household.’”  Applying this rationale, the Court held that the so-called “transient living” of the rental tenants fell “outside the scope of a single-family residential use,” and thus granted Defendants summary judgment on their first counterclaim.

Defendants remaining adverse possession counterclaim met a less favorable outcome, with the Court holding that because the road parcel was held by the parties as co-tenants, any use of the parcel by either party was presumed to benefit the other, as the law presumes that one co-tenants’ possession benefits all other co-tenants.  Due to this, Defendants’ use could only be considered “adverse” if they had been expressly or impliedly “ousted” from use of the property, which had never occurred.  Thus, this claim was dismissed.

Takeaways

As the short-term vacation rental economy grows, property owners seeking to venture into the market should pay close attention to any restrictions that run with their land, as even a family unit vacationing in a single-family home could potentially be outside the scope of permitted uses.