Pine-Oak Subdivision Homeowners

Short-Term Rentals — Statement of Facts and Request for Member Direction

A new lot owner has told a board member he intends to operate his property as a short-term vacation rental. The board has not approved this and has not been asked to. This letter states the facts and asks you to decide how we proceed.

1. What Our Documents Say

We have two recorded documents from January 7, 1982: the Declaration of Protective Covenants, and the Homeowners Association Declaration. Neither mentions short-term rentals. The term did not exist in 1982.

Provisions that support restricting it:

• Article III: "No commercial use, feed lot, noxious or offensive trade or activity shall be carried on upon any residential lot, nor shall anything be done thereon which may become an annoyance or nuisance to the neighborhood."
• Article I: each residential lot shall contain only one single-family dwelling; only one permanent residence per lot is permitted.
• Article XXIII: the Association or any owner may enforce these covenants by legal or equitable proceedings.

Provision that works against us:

• Article I also states that guest cottages "may be erected for personal use only and may not be rented." This is the only rental prohibition in either document, and it applies to guest cottages rather than to the main residence. The opposing argument is that the drafters knew how to prohibit renting and chose not to apply that prohibition to the primary dwelling. Members should know this before deciding anything.

On county zoning: our lots are zoned to allow short-term rental use. This does not settle the question. Zoning sets the outer limit of what the county permits; private covenants may restrict further, and ours do. County permission does not override Article III.

2. Prior History

This is not the first short-term rental in Pine-Oak. In [YEAR] the Association sent a written objection to an owner operating one. That rental later ceased, but the owner said his circumstances had changed and he was living in the home himself. He never responded to our letter or acknowledged that the covenants applied to him. The Association has never agreed that short-term rentals are permitted here, and there is a written record of that. Beyond that, the question has never been tested.

3. What the Board Can and Cannot Do

The board has no authority to prohibit short-term rentals by rule.

Article VI of the HOA Declaration provided for bylaws to be drawn up and adopted. That was never done. Without bylaws, the board's authority is limited to what the two Declarations expressly grant: setting assessments within the stated cap, approving building and exterior finish plans, and approving signs. Nothing more. A board vote purporting to ban short-term rentals would carry no legal weight, and we are not going to pretend otherwise.

That leaves exactly two paths: amend the covenants, or go to court.

4. What Litigation Would Involve

The remedy for a covenant violation is a court order to stop, not money damages. The Association would have to file suit. The new owner has no reason to file against us.

Two cost facts:

• Our covenants contain no attorney-fee provision for this type of enforcement. Fee recovery appears only in Article IV of the HOA Declaration and only for collecting unpaid assessments. Win or lose, we pay our own legal costs.
• Article IV, Section 2 of the HOA Declaration states that assessments "shall be used exclusively for the maintenance and improvement of the roads." Our dues cannot be spent on this. Special assessments under Section 4 are limited to the road system as well. Any legal action would have to be funded entirely by voluntary contributions.

No one is being asked to commit money now.

Article XXIII also permits any individual owner to enforce the covenants. This does not have to be an Association action.

5. The Amendment Window

Article XXII provides that these covenants run for twenty years from January 7, 1982, and then automatically renew for successive five-year periods unless changed by vote of the lot owners. We are approaching one of those renewal points. That is a short window, and it is the reason this is in front of you now rather than later.

Amending the covenants to address short-term rentals directly — defining the term and either prohibiting it or permitting it with conditions — costs a fraction of litigation and resolves the question permanently rather than leaving a 44-year-old sentence to one judge's reading. It settles the matter for every future owner, not just this one.

An amendment requires a formal vote of the lot owners and a recorded document filed with Lawrence County. Any survey or poll we circulate is to gauge where members stand. It is not the amendment vote itself.

6. What Is at Stake

Pine-Oak's roads are maintained by owner assessments and the board is staffed by resident volunteers. If short-term rental is permitted here by default, the common pattern in comparable subdivisions is more investor-owned lots, fewer resident owners, and fewer people available to serve. Whichever direction we choose, it should be chosen deliberately rather than by default.

7. What We Are Asking You

Please respond by [DATE]. Results will be reported to all members. The board will take no action until then.

8. About the Association

Pine-Oak Subdivision Homeowners Association has been a South Dakota nonprofit corporation in good standing since 2006. Any action taken here is taken by the Association as an organization, not by individual neighbors.

We are working from retyped copies of the 1982 documents and are obtaining certified copies from the Lawrence County Register of Deeds. If the recorded originals differ from anything quoted above, the recorded originals control and we will issue a correction.

[NAME]
For the Pine-Oak Subdivision Homeowners Association Board