Tennessee appeals court: covenant silence favours the owner
Tennessee appeals court: covenant silence favours the owner
2026-09-19 · Tennessee · Courts
The Tennessee Court of Appeals decided two short-term rental covenant cases in 2025, and together they say something narrow and consequential: a restriction that does not expressly and unambiguously prohibit short-term rentals will not stop one. Silence runs against the party seeking to enforce, not against the owner.1
Both appeals came out of East Tennessee lake communities, and both were decided after the Tennessee Supreme Court's 2023 decision in Pandharipande v. FSD Corporation, which remains the controlling authority in this area.2
Ambiguity defeats enforcement
The first is Lone Mountain Shores Owners Association, Inc. v. Bennafield, No. E2024-00569-COA-R3-CV, filed June 9, 2025. Judge Thomas R. Frierson, II wrote for an Eastern Section panel, on appeal from the Circuit Court for Claiborne County. The association had sued owners over rentals through Airbnb and VRBO; the trial court granted summary judgment to the homeowners, and the Court of Appeals affirmed.
The court held the association's 2013 amended covenants could reasonably be read to allow short-term rentals, and that the parties' competing readings themselves demonstrated ambiguity — the covenants were “susceptible to more than one interpretation.” Because they were ambiguous, the court concluded, “they are unenforceable against the Homeowners in this action.”
The passage doing the doctrinal work is broader than the facts:
“The standard does not require that a restrictive covenant must expressly permit a type of property use before a homeowner can use his or her property for that purpose. … On the contrary, it is the prohibited uses of property that must be expressly and unambiguously stated in a restrictive covenant for the prohibition to take effect.”
That allocates the drafting burden. An association arguing that its covenants never authorised short-term rentals is making an argument the court has said is not available.
"Residential purposes only" does not reach it either
The second is Salem v. Galbraith, No. E2024-00337-COA-R3-CV, filed December 15, 2025. Judge John W. McClarty wrote for the panel, on appeal from the Chancery Court for Campbell County. The plaintiffs were neighbouring owners rather than an association, seeking to enjoin short-term rentals in the Cove Norris subdivision on Norris Lake. The case had been stayed pending Pandharipande.
On the covenant claim the court affirmed dismissal, holding the complaint did not state a claim for a “judgment enjoining Defendants from operating their respective properties as short-term rentals” on the strength of the declarations' residential-purposes language.
The half that was reversed
Salem is the more useful of the two precisely because it did not go entirely one way. The Court of Appeals reversed the dismissal of a second set of claims:
“We reverse the trial court's dismissal of Plaintiffs' claims for common law nuisance and nuisance as defined in the applicable restrictive covenants. We affirm the trial court's order in all other respects.”
The declaration's own nuisance provision — the familiar clause barring any obnoxious or offensive activity, or anything that may become an annoyance or nuisance — survived a motion to dismiss on allegations about late-night parties and noise.
So the two routes come apart. A challenge to short-term renting as a use runs into the ambiguity rule and into Pandharipande. A challenge to specified conduct at a property runs on its own facts and is not answered by the use analysis at all. The second is fact-bound and expensive, which is a different obstacle from the first, not a smaller one.
The court also declined to shift costs in either direction: it denied the defendants fees under section 20-12-119(c) given the partial reversal, and declined to find the appeal frivolous under section 27-1-122.
A caption error worth knowing about
The administrative index of Tennessee appellate opinions lists the first case as “Lonshores Owners Association Inc. v. Henry Bennafield,” and third-party databases have carried that spelling forward. The opinion's own caption reads “Lone Mountain Shores Owners Association, Inc.”
The docket number is stable and unaffected: E2024-00569-COA-R3-CV. Anyone searching by association name will want both spellings.
What this does not decide
Three limits are worth stating plainly, because the rule is narrower than the headline.
It is a rule about drafting, not about short-term rentals. An express, unambiguous prohibition is enforceable on the same reasoning. The cases say what a covenant has to do, not that a covenant cannot do it.
Neither case addresses amendment. How a Tennessee association may adopt such a prohibition, and against whom a later-adopted restriction operates, is governed by the declaration's amendment provisions and by Part 7 of Title 66, Chapter 27, which protects certain vested rental rights when new restrictions are adopted. Neither opinion construes that part.
Neither case involved a condominium. Both were non-condominium communities operating under recorded covenants. A condominium association's authority runs through the Condominium Act of 2008 as well as its declaration, and neither opinion addresses that framework.
What to watch next
Whether either case went further is not established on the record available here. Applications for permission to appeal under Rule 11 are filed with the Tennessee Supreme Court, and we were not able to confirm the Rule 11 status of either case — so neither should be treated as final for that purpose without checking.
On the legislative side nothing moved. The 114th General Assembly introduced no bill addressing association authority over short-term rentals across either of its sessions and adjourned on April 23, 2026. The Tennessee Short-Term Rental Unit Act continues to leave private restrictions in place regardless of what a local government permits, which is what makes the covenant-drafting question the operative one.
Related Tennessee HOA Topics
- Lone Mountain Shores Owners Ass'n, Inc. v. Bennafield, No. E2024-00569-COA-R3-CV (Tenn. Ct. App. June 9, 2025) — opinion record ↩
- Salem v. Galbraith, No. E2024-00337-COA-R3-CV (Tenn. Ct. App. Dec. 15, 2025) — opinion record ↩
- Lone Mountain Shores opinion PDF (Tennessee Administrative Office of the Courts) ↩
- Pandharipande v. FSD Corp., No. M2020-01174-SC-R11-CV (Tenn. Oct. 17, 2023) — controlling Supreme Court authority ↩
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