Commercial Zoning

N.C. Court of Appeals: Location of Cell Phone Towers, Restrictive Covenants and Vacation Rentals

This morning, the North Carolina Court of Appeals published two decisions that bear directly on land use issues. 
In no particular order, the first decision addresses the validity of a municipality’s decision to deny a special use permit to the location of a cell phone tower while the second decision addresses the effect, if any, of a restrictive covenant on a residential landowner’s ability to enter into short-term rental agreements.
Special Use Permits and Cell Phone Towers
In American Towers, Inc. v. Town of Morrisville the Court reviewed the trial court’s decision affirming the Town’s denial of American Tower’s application for a special use permit.  Essentially, the trial court determined that the permit application for the location of a cell tower failed because (1) the tower was not in harmony with the neighborhood, (2) the tower was not in conformity with the comprehensive plan, and (3) the tower would cause injury to the value of adjoining property.
The Court affirmed the trial court’s decision though on the sole basis that American Tower “failed to make out a prima facie case” regarding injury to the value of adjoining property.  The Court determined that it is “bound” by its prior decision in SBA, Inc. v. City of Asheville City Council (2000) regarding the presentation of expert testimony as to property values, which the Court states is “a virtually identical fact situation” to the matter at hand.  In reaching this conclusion, the Court cites a North Carolina Supreme Court case for the following principle: “Where a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court.”
Notably, in reversing the trial court with regard to the “harmony” and “comprehensive plan” issues, the Court appears comforted by the zoning of the subject property.  That is to say, the fact that the property was zoned to allow for the construction of a cell phone tower –subject to the issuance of a special use permit, of course — seemed to convince the Court that the proposed use would meet these requirements.
Restrictive Covenants and Short-Term Vacation Rentals
North Carolina is a vacation destination: mountains, beaches, four seasons, wine, history, music, food, collegiate and professional sports.  The list goes on.  As a result, a number of communities feature hotels and bed/breakfast spots, sure, but also residential rentals.  You know, VRBO and places.
In beautiful Caldwell County, amidst the Blue Ridge Mountains, long weekends are common.  So, it seems, are short-term vacation rentals.  One particular community, however, was subject to the following restrictive covenant:
“No lots shall be used for business or commercial purposes.”
Owners of lots in the restricted subdivision sued, claiming short-term vacation rentals violated the above restrictive covenant.  The trial court disagreed, grating summary judgment to the defendants. 
In Russell v. Donaldson, the Court of Appeals, in a relatively brief opinion, affirmed the trial court and upheld the use of short-term vacation rentals.  In doing so, the Court did the following:  (1) the Court makes it clear that judicial enforcement of a restrictive covenant is proper at summary judgment, subject to very specific exceptions, (2) the Court makes it clear that restrictive covenants are “not favored by the law” and will be “strictly construed” such that “nothing can be read into a restrictive covenant enlarging is meaning beyond what is language plainly and unmistakably imports”, (3) the Court makes it clear that any ambiguities in terms of a restrictive covenant will be resolved in favor of the “free and unrestricted use and enjoyment of land”. 
As for precedent, the Court finds none for this kind of restrictive covenant in the annals of North Carolina case law.  Accordingly, the Court looks to case law from other states, including Oregon, Alabama and Maine.  In reviewing those authorities, the Court concludes that short-term vacation rentals have been permitted in “fact patterns that are nearly identical to the covenant and facts in the instant case”.

My vacation plans are intact, after all.  We’ll see some of you in Blowing Rock; though, my cell phone may not work.

Mike Thelen is a lawyer in Womble, Carlyle’s Real Estate and Land Use Litigation practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.

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