Brandt v. R&R Mountain Escapes, LLC (2025): Broad Commercial-Use Bans in Restrictive Covenants Unambiguously Prohibit Short-Term Rentals

Introduction

Brandt v. R&R Mountain Escapes, LLC, 2025 MT 155, marks the Montana Supreme Court’s most definitive pronouncement to date on whether short-term vacation rentals (STRs) are compatible with traditional rural subdivision covenants. The dispute pitted six neighboring landowners (“the Neighbors”) against R&R Mountain Escapes, LLC (“R&R”), which had been offering a Whitefish-area residence on Airbnb/VRBO for stays as short as five days, accommodating up to ten guests and generating more than $55,000 in its first year.

The core controversy centered on a 1990 “Declaration of Covenants, Conditions and Restrictions” (the “Declaration”) that: (1) envisioned “country residential living”; (2) required use “only for country residential purposes”; and (3) contained an absolute ban on “any business, trade, manufacture, or any other commercial purpose whatsoever.” The District Court granted summary judgment to the Neighbors and enjoined further STR activity. On appeal, R&R challenged the injunction, while the Neighbors cross-appealed denial of attorney fees.

Summary of the Judgment

Holding 1: Reading the Declaration as a whole, the Court held that the express prohibition on “any…commercial purpose whatsoever,” together with additional covenants (single-family residence requirement, nuisance clause, country-living objective), unambiguously bars short-term vacation rentals, notwithstanding the absence of an explicit minimum-stay provision.
Holding 2: The District Court correctly denied attorney fees; the Declaration made fee awards permissive, and the lower court did not abuse its discretion in declining to award them.
Clarification of Precedent: The opinion limits the reach of Craig Tracts HOA v. Brown Drake, LLC, 2020 MT 305, by emphasizing that not every covenant using the word “residential” is necessarily ambiguous; courts must consider the entire covenantary scheme. It also builds on Myers v. Kleinhans, 2024 MT 208, to reiterate that profit-oriented renting is a “commercial” use.

Analysis

1. Precedents Cited

a. Craig Tracts (2020) introduced the “functional plus durational” test for “residential purpose” and found ambiguity where duration was unspecified, applying the presumption favoring free use of property. Brandt acknowledges but cabins Craig Tracts:

Ambiguity is not automatic; the court should consider all covenants, not a single clause in isolation.
Where additional provisions (e.g., an unqualified commercial-use ban) clarify intent, courts need not default to the pro-use presumption.

b. Myers v. Kleinhans (2024) held that renting an accessory dwelling for profit is a “commercial operation.” Brandt relies on Myers to reinforce the plain-meaning approach to “commercial purpose.”

c. National STR Case Law The Court surveys decisions nationwide, noting three strands:

Majority view: “Residential purpose” has no durational component → STRs allowed.
Minority/ambiguous view: duration matters → often found ambiguous.
Small subset: explicit bar on STRs via “residential” language.

The Court places Montana in the second group post-Craig Tracts, but shows how additional covenants can push the analysis into the first (unambiguous prohibition) category.

2. Legal Reasoning

Contractual Interpretation Principles. Covenants are construed like contracts (§§28-3-201 ff., MCA). The “whole-instrument” rule (§28-3-202) requires viewing the Declaration in its entirety, giving effect to each clause.
Plain Meaning of “Commercial.” Citing Black’s Law Dictionary and statutory definitions (§50-30-102, MCA), the Court finds STRs—advertised nationwide, booked through Airbnb/VRBO, yielding substantial revenue—squarely within “commercial purpose.”
Harmonization of Clauses. The “single-family residence,” “nuisance,” and “country residential living” provisions buttress the commercial-use ban. STR influx (traffic, trespass, bull-pen incident) constitutes a nuisance and undermines rural quiet enjoyment.
Rejection of a 30-Day Graft. While the District Court imported Flathead County’s zoning definition (<30 days), the Supreme Court declines to “insert” absent language (§1-4-101, MCA). The prohibition flows from the Declaration’s broad wording, not an arbitrary day-count.
Extrinsic Evidence & Ambiguity Doctrine. The Court clarifies that extrinsic evidence is admissible only to illuminate the circumstances at the time the covenant was made; it cannot contradict plain text or subsequent usage.

3. Impact of the Decision

a. Practical Effects

Homeowners associations (HOAs) and rural subdivisions now possess a clear roadmap: if covenants include a categorical ban on “any commercial purpose,” STRs are presumptively disallowed even without a minimum-stay clause.
Montana district courts have explicit guidance to analyze entire covenant schemes before declaring ambiguity, reducing litigation uncertainty.
Real-estate purchasers and STR investors must conduct heightened due diligence on covenant language beyond “residential use.”

b. Broader Doctrinal Significance

Solidifies a two-tier framework: (1) If covenants expressly ban commercial activity, STRs are out; (2) Absent such language, Craig Tracts ambiguity analysis applies.
Signals judicial unwillingness to stretch ejusdem generis or noscitur a sociis canons to dilute all-inclusive phrases like “any…commercial purpose whatsoever.”
May influence zoning debates by emphasizing private-law tools (covenants) over public regulation for controlling STR proliferation.

4. Complex Concepts Simplified

Restrictive Covenant	A private contract attached to property deeds that limits how land can be used (e.g., no businesses, architectural rules). They “run with the land,” binding future owners.
Short-Term Rental (STR)	Leasing a dwelling for brief stays (usually under one month) via platforms like Airbnb, VRBO, etc.
Ambiguity Doctrine	If contract language can reasonably support two meanings, it is “ambiguous,” and courts may (i) consider extrinsic evidence, and (ii) apply presumptions such as favoring free use of property.
Noscitur a Sociis	Interpretive canon: a word is known by the company it keeps—i.e., its meaning is colored by surrounding words.
Ejusdem Generis	When a list ends with a general phrase (“…and other items”), courts presume the general phrase covers only things of the same type as the specific items listed.
Summary Judgment	Procedural device whereby the court decides a case without trial if no material fact disputes exist and one party is entitled to judgment as a matter of law.

Conclusion

Brandt v. R&R Mountain Escapes definitively answers a question left partially open after Craig Tracts: when rural subdivision covenants contain a sweeping commercial-use prohibition, Montana courts will treat short-term vacation rentals as unambiguously barred—even in the absence of a specified length-of-stay. The opinion clarifies the proper role of extrinsic evidence, tightens the approach to ambiguity, and underscores that private covenantary regimes remain powerful levers for communities seeking to preserve residential character against the rapid expansion of the STR economy. While it affirms judicial discretion to withhold attorney fees in borderline-ambiguous scenarios, the case’s primary legacy is its doctrinal clarity: “Any commercial purpose whatsoever” means exactly that, and STRs fall squarely within the prohibition.