Judge rules on Airbnb dispute that turned nasty in divided Tennessee mountain town

A national debate about Airbnbs became local in an East Tennessee neighborhood where the homeowners association sued some of its own members who used their homes as short-term vacation rentals.

On March 4, a Claiborne County judge ruled the covenants in Lone Mountain Shores on Lake Norris were too ambiguous to ban short-term vacation rentals.

The ruling could bring an end to a court battle that began in 2022, when the HOA board in the New Tazewell neighborhood sued around two dozen part-time residents who used their homes as vacation rentals, alleging the rentals violated the neighborhood rules.

The ruling settles one court case, but that doesn't end the neighborhood divide. In response to the board's action, several residents sued the board themselves in separate cases. One lawsuit alleges the board failed to follow its own voting procedures in an election last year, and another alleges the board defrauded homeowners by misleading them to think they could rent out their homes short-term.

Personal slights and lost relationships were commonplace in Lone Mountain Shores as neighbor turned against neighbor and battle lines were drawn. On one side were those who said short-term rentals disrupt the neighborhood's identity and on the other were mostly part-time residents, some of whom used rental revenue to pay for a second home, who said they had a right to rent.

Some residents say it could take years for the divide to heal, even after the court ruling.

What judge said in New Tazewell short-term rental dispute

Chancellor Elizabeth Asbury skirted other legal questions at hand, including whether it mattered that previous HOA boards had allowed short-term rentals. Her opinion rested on the judgment that different people could interpret the neighborhood's covenants differently, and that the rules did not clearly ban rentals through sites like Airbnb and Vrbo.

The judge leaned on a 2023 Tennessee Supreme Court ruling in a similar lakeside neighborhood. In that opinion, the state's highest court said the word "residential" was too ambiguous to ban short-term rentals.

Lone Mountain Shores limits properties to "single family residential purposes" and prohibits many rental accommodations like hotels and bed and breakfasts. Chancellor Asbury ruled that Airbnbs could fall into the "single family residential purposes" category as long as an entire home was rented to a family or affiliated group who used it like a home.

She also said the neighborhood's rentals, some of which go for up to $950 a night in peak travel seasons, were not "commercial" as long as homeowners did not provide services for guests like meals or entertainment.

“My clients and I fought diligently to protect their property rights against this unwarranted attack by the Lone Mountain Shores HOA Board,” said Ryan Sarr, attorney for the defendant homeowners, in a press release. “I am very pleased with the Court’s decision.”

What's next in Lone Mountain Shores

The pro-renter ruling shocked many full-time residents who showed up in large numbers to support the HOA board at a court hearing in January.

The president of the HOA board, Claudio Biltoc, inherited the original case from his predecessor. When he campaigned for that office, Biltoc said he would accept the court's decision and not appeal it further. In a statement to Knox News on March 4, Biltoc said the board would "review the ruling and decide on a way forward to hopefully bring this issue to a closure."

The board's attorney, Preston Hawkins, had argued the neighborhood's rules prohibiting almost all rentals clearly included short-term vacation rentals, even if prior boards had not enforced them.

"We are surprised and disappointed by the decision," Hawkins told Knox News.

The board could propose a new rule to more specifically ban short-term rentals, such as limiting rentals to 30 days or longer. Chancellor Asbury wondered in her opinion why the board had not already taken this step, though the Airbnb rental model has become much more common since the board amended its property use rules in 2013.

Ballot measures in the neighborhood have either passed or failed by razor-thin margins — often in the board's favor and often amid controversy.

Defendants fighting the board had told Knox News they would appeal the court's decision. Now they don't have to, since the judge ruled in their favor. Defendant Jason Jordan is part of a group suing the board members personally, alleging they defrauded homeowners.

Jordan, a part-time resident who was sued by the board, is taking a moment to celebrate the judge's decision.

"I'm looking forward to my summer and kids, you know, laughing, cheering and playing out in the lake and having a good time," he said.

Daniel Dassow is a growth and development reporter focused on technology and energy. Phone 423-637-0878. Email daniel.dassow@knoxnews.com.

Support strong local journalism by subscribing at knoxnews.com/subscribe.   

This article originally appeared on Knoxville News Sentinel: Tennessee mountain town Airbnb dispute could end with judge ruling