“Single-Family Residence Purposes” Re-Defined:
Berlin Trust v. Rubin and the Future of Short-Term Rentals in Michigan

1. Introduction

Swift Estates, a nine-home lakeside enclave in Berrien County, became the battleground for a question confronting subdivisions across the country: does a covenant limiting each lot to “single family residence purposes” prohibit modern, internet-facilitated short-term rentals? Several resident trusts (plaintiffs) sued fellow owners Thomas Rubin, Nina Russell, and 14288 Lakeshore Road LLC (defendants) who had listed their homes on vacation-rental platforms. The trial court and Court of Appeals barred the rentals; the Michigan Supreme Court granted leave but, by an evenly divided Court, affirmed the lower court.

Although procedurally affirmed by tie vote, two lengthy separate opinions expose the competing theories of covenant interpretation and mark the decision as a practical precedent: near-continuous short-term renting is incompatible with a “single family residence purposes” clause, even while a genuine seasonal “summer home” remains protected residential use.

2. Summary of the Judgment

• The Supreme Court’s order states only: “the judgment of the Court of Appeals is AFFIRMED by equal division of the Court.” (No majority opinion.)
• Justice Welch’s concurrence (joined by Justice Zahra) agrees that defendants’ rentals violate the covenant but corrects the Court of Appeals’ over-broad statement that a “summer home cannot constitute a permanent residence.”
• Justice Thomas’s dissent (joined by Chief Justice Cavanagh and Justice Bolden) finds the phrase “single family residence purposes” ambiguous, would construe doubt in favor of free use, and would therefore permit the rentals.
• The equal split leaves the Court of Appeals decision intact: defendants are permanently enjoined from short-term renting in Swift Estates.

3. Analysis

3.1 Precedents Cited

1. O’Connor v. Resort Custom Builders, 459 Mich 335 (1999) – core precedent defining “residential purpose” through the concepts of permanence and continuity of presence. Welch relies on it; Thomas disputes its reach.
2. Terrien v. Zwit, 467 Mich 56 (2002) – held that running a commercial day-care violated a residential-only covenant; used by Court of Appeals to label rentals “commercial.”
3. Wood v. Blancke, 304 Mich 283 (1943); and Bloomfield Estates Improvement Ass’n v. Birmingham, 479 Mich 206 (2007) – articulate Michigan’s general rules: doubts resolved for free use, yet clearly drafted residential covenants are favored.
4. Multi-state persuasive authorities – Justice Thomas catalogs 13 state supreme court decisions broadly permitting short-term rentals under similar language, underscoring national divergence.

3.2 Legal Reasoning

Concurrence (binding on result)

• “Single family residence purposes” requires more than the physical activities of sleeping and eating; it requires an ownership or occupancy relationship conveying permanence.
• The defendants marketed their houses “almost exclusively” for transient guests—“mass-marketed hotel equivalents.” Such use falls outside the covenant.
• However, the Court of Appeals erred in saying a house cannot be a residence if the owner’s domicile is elsewhere; a bona fide summer home can satisfy the covenant (correcting a potential misreading of O’Connor).

Dissent

• Identifies five equally plausible readings of the phrase, ranging from building-form restrictions to occupant conduct.
• Because the language is ambiguous, Michigan precedent dictates resolving doubt in favor of free use; consequently, rentals should be allowed.
• Warns against stretching century-old, sometimes discriminatory covenant language to new contexts (Airbnb-type rentals) without clearer wording.

3.3 Impact

• Short-Term Rental Market: Homeowners’ associations (HOAs) and condominium boards now possess Michigan Supreme Court support to enforce similar covenants against regular vacation-rental activity—even without an express “no rentals” clause—if they can show near-continuous transient occupancy.
• Drafting Practice: Real-estate counsel will likely insert explicit “rental” provisions to avoid ambiguity. Expect heightened disclosure obligations for brokers after defendants alleged reliance on agent assurances.
• Litigation Strategy: The opinion underscores the evidentiary importance of rental frequency. Occasional family-and-friends leasing may still be permissible; high-volume, publicly advertised rentals are vulnerable.
• Doctrinal Clarification: Re-centers O’Connor on permanence, distancing Michigan from states that equate any fee-based occupancy with “commercial use.”
• Equal-Division Effect: Although not technically precedential beyond this case, the concurrence’s analysis will be persuasive authority until a future majority revisits the issue.

4. Complex Concepts Simplified

• Equal Division Affirmance: When the seven-member Court splits 3-3 (one justice not participating), the lower court’s judgment automatically stands but no binding majority opinion exists.
• Restrictive Covenant: A private, deed-based promise limiting how land may be used (e.g., only residential, height limits, pet bans). Enforced like a contract among all owners.
• Permanence & Continuity of Presence: A test from O’Connor. A property is a “residence” if its owners maintain an enduring connection—storing belongings, returning regularly—even if they are absent for weeks at a time.
• Short-Term Rental (STR): Typically a stay of fewer than 30 days, marketed on platforms such as Airbnb or VRBO, often rotating multiple guest groups annually.
• Noscitur a sociis: Latin for “a word is known by its associates”; the location of a clause in a document helps define its meaning.

5. Conclusion

Berlin Trust v. Rubin does not announce a formal majority rule, yet it operationally reshapes Michigan covenant law. The key lesson: a “single family residence purposes” clause bars systematic short-term rental activity that converts a home into a de-facto lodging business, but it does not outlaw genuine second-home living. Future litigants must focus on degree and character of use—permanence, continuity, and community impact—rather than mere presence of paying guests.

More broadly, the case signals to drafters, HOAs, and property owners that Michigan courts will scrutinize twenty-first-century rental practices through twentieth-century covenant language, and where ambiguity remains, clarity by amendment is safer than litigation.