Violation of a restrictive covenant; Long-term rental of a home; “Business or commercial purposes”; Terrien v Zwit; Eager v Peasley; Enchanted Forest Prop Owners Ass’n v Schilling (Unpub); Aldrich v Sugar Springs Prop Owners Ass’n; John H. Bauckham Trust v Petter (Unpub); “Residential”; Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham; Waiver

The court held that any rental of defendant-subdivision homeowner’s (Gribi) “property, regardless of length or whether it is residential in nature, violates the unambiguous restrictive covenant prohibiting commercial use of the property.” Further, the trial court did not err in concluding that plaintiff-Association had not waived enforcement of the restriction. Thus, the court affirmed summary disposition for plaintiff in this dispute over a nine-month rental of Gribi’s home. The “restrictions state, ‘All lots shall be used and occupied for residential purposes only, and may not be used for business or commercial purposes.’” As they did not define “residential,” the court reviewed the definition given by the Michigan Supreme Court in Bloomfield Estates. It also reviewed the Supreme Court’s definitions of “commercial” and “business” in Terrien, and the court’s own decisions interpreting subdivision restrictive covenants. It noted that while Eager, Aldrich, and Enchanted Forest, among other cases, addressed short-term rentals, in Bauckham Trust, it “concluded that the trial court did not err by enjoining all rental activity, including long-term rentals, on subdivision lots owned by the defendants that were encumbered by deed restrictions prohibiting the use of the lots for commercial purposes.” The court found the reasoning of that decision persuasive and adopted it here. Reading the restrictions here “as a whole, the unambiguous language expresses an intent to restrict use of the lots in the subdivision to nonbusiness and noncommercial residential use.” It noted that Gribi had “not resided at the property since 2022,” and the record showed she had no intent to return. She intended to use the “rental income to offset her monthly assisted-living expenses. Thus, [she] was using her property ‘in connection with or for furtherance of a profit-making enterprise.’” Based on the Terrien definitions and the reasoning in Bauckham Trust, “any rental of Gribi’s property, regardless of length or whether it is residential in nature, violates the unambiguous restrictive covenant prohibiting commercial use of the property.” The court also rejected her alternative argument that “the Association waived the restriction by previously acquiescing to short-term rentals of other” properties. Her “long-term rental constitutes a ‘more serious’ violation of the deed restriction than the prior sporadic, short-term rentals of a few lots in the 37-lot subdivision.”