A legal fight may be on Fort Worth’s horizon.
As the City Council considers updating the city’s short-term rental regulations, people are questioning the legality of restrictions both in public comment and community conversations.
Proponents of short-term rentals have argued homeowners associations and city governments alike don’t have jurisdiction to ban them, citing a Texas Supreme Court case decided in 2018. Opponents of short-term rentals say the court opinion works in their favor by expressly allowing cities and homeowners associations to limit the minimum duration of rental periods.
Tarr v. Timberwood Park Owners Association began after Kenneth Tarr purchased a single-family home in San Antonio’s Timberwood Park subdivision and subsequently started renting it as a short-term rental. The association sent Tarr a warning letter for violating its covenants, which hold that properties must be residential in purpose and be occupied by a single family.
After accruing a large amount of fines from the association, Tarr took the issue to court, arguing the covenants do not impose a minimum duration on occupancy or leasing. While he lost in trial court and the Fourth Court of Appeals, Tarr ultimately prevailed after the Texas Supreme Court reversed the previous decisions and held the covenants weren’t strict enough to ban short-term rentals in their entirety.
The larger impact of the case is at this point unclear. It was cited as precedent in an Austin-area case, where homeowners challenged the city’s attempt to ban non-owner occupied short-term rentals in their entirety.
The Texas Court of Appeals in Travis County held Austin’s ban was “unconstitutional as a retroactive law.” The city has argued that decision only applies to the banning of short-term rentals currently in existence, not potential new ones. As such, it is declining to issue new short-term rental licenses for non-owner occupied homes.
Fort Worth would have a stronger case for banning existing short-term rentals than Austin, Dave Schwarte, a retired corporate lawyer and advocate against short-term rentals across the state, said.
Austin attempted to ban short-term rentals it previously issued licenses to, Schwarte said. Fort Worth has not issued licenses to any short-term rental properties, so the city likely would not have to grandfather in any existing short-term rental properties.
The court decided the Austin case in Nov. 2019. Nearly a year later, the Texas Court of Appeals in Fort Worth upheld an Arlington ban on short-term rentals. Schwarte attended the trial.
“You hear the short-term rental folks say, ‘Texas Supreme Court decision forbids cities from banning short-term rentals,” Schwarte said. “The short answer to that is if that were true, how in the world could the Arlington ordinance remain in effect today?”
In the Austin case opinion, the appeals court said Tarr v. Timberwood held that both short-term rentals and owner-occupied homes are residential in nature. While the Texas Supreme Court defines short-term rentals as a residential use of property, it does not prohibit cities from using zoning to restrict short-term rental properties, Schwarte said.
Tarr v. Timberwood distinguishes between commercial and residential development, Luz Herrera, associate dean for Experiential Education at the Texas A&M School of Law, said. A commercial property is defined by employees or indication of business through signage, the Tarr v. Timberwood opinion states.
“Here, there is no evidence that Tarr makes any commercial use upon the tracts themselves, and he concedes that were he to establish a leasing office or similar indicc(tion) of business, his property use would then violate the Timberwood covenants,” a footnote of the Tarr v. Timberwood case reads.
“I think that opinion really favors a continued Airbnb presence in Fort Worth,” Herrera said.
The Tarr case represents a more conservative approach to interpreting Texas law, Herrera said. It argues that the homeowners association couldn’t intend to exclude short-term rentals, because short-term rentals did not exist in the neighborhood when the covenants were drafted.
Texas code grants homeowners associations several powers, including the setting of restrictions and covenants, according to previous reporting. Occupants of homes within an association are legally bound to comply with the restrictions and covenants, according to Tex. Prop. Code § 209.006. According to Homeowners Protection Bureau, LLC, which publishes educational materials aimed at organizations like homeowners associations, making sure a declaration expressly forbids short-term rentals is the best way to ensure restriction is enforceable.
“Fort Worth has a very strong case, but I think the longer you wait, the peskier the problem gets,” Schwarte said.
Rachel Behrndt is a government accountability reporter for the Fort Worth Report. Contact her at rachel.behrndt@fortworthreport.org or via Twitter.
Emily Wolf is a government accountability reporter for the Fort Worth Report. Contact her at emily.wolf@fortworthreport.org or via Twitter.
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