Title: Lowden v. Bosley

State: maryland

Issuer: Maryland Supreme Court

Document:

IN THE COURT OF APPEALS OF MARYLAND
No. 78
September Term, 2005
_________________________________________
JAMES LOWDEN, et ux.
v.
DANIEL B. BOSLEY, et al.
__________________________________________
Bell, C.J.
       
Wilner
Cathell
Harrell
Battaglia
Greene
Eldridge, John C. (Retired, Specially
 Assigned),
                  JJ.
__________________________________________
Opinion by Eldridge, J.
 Wilner, J., concurs in the judgment only.
_________________________________________
Filed:   October 17, 2006
The issue in this case is whether a restrictive covenant, which requires that
building lots within a 59-lot subdivision along Deep Creek Lake in Garrett County,
Maryland, be used for “single family residential purposes only,” prohibits the owners
of homes on those lots from renting their homes to residential tenants on a short-term
basis.  We shall hold that the restrictive covenant is unambiguous and that it does not
prohibit the short-term rental to a single family of a home. 
I.
The plaintiffs-appellants, James and Angela Lowden, in September 2003,
purchased lots 11 and 11A in the Stilwater subdivision along Deep Creek Lake in order
to build a vacation home.  That same month, four other lots in the Stilwater Subdivision
were purchased by the defendants-appellees, MBC-TEK Lake Properties, LLC, Daniel
and Angela Bosley, and James and Deborah Cline.  The following April, the
defendants-appellees Rick and Jill Dansey acquired two lots.  All of these defendants-
appellees subsequently built large homes on their lots, and several of their homes are
available to vacationers as short-term residential rental properties. 
The Stilwater subdivision was originally part of a larger tract of land owned by
New Glen Properties, LLC, which had subdivided and sold various waterfront and
water access lots during 2003 and 2004.  All lots were subject to restrictive covenants
recorded in June 2003 by New Glen in a Declaration of Covenants, Conditions and
Restrictions.  That Declaration stated that the purpose of the subdivision was to
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“develop or cause to be developed on the Property a residential community . . . .”  The
Declaration contains a provision entitled “uses” which restricted the use of the
property. Section 8.1 of the Declaration states as follows (emphasis added):
“Uses.  All lots shall be used for single family residential purposes
only.  No structure of a temporary character whether a basemen t,
tent, shack, trailer, camper, or other out-building will be placed on
any Lot at any time as a permanent or temporary residence.”
Article 8 of the Declaration also contains provisions restricting the subdivision of lots,
the posting, storage, and keeping of certain items on the property, and the necessity of
the Architectural Committee’s approval before a home could be built and for various
other activities concerning the property.  Additionally, § 2.7 of the Declaration, entitled
“Delegation of Use,” states as follows (emphasis added):
“Delegation of Use.  Any Owner may delegate, in accordance with
the Bylaws, his right of enjoyment to Common Areas and facilities
to members of his family, his tenants or contract purchasers who
resides on a Lot.”
The Lowdens, in May 2004, after learning that the individual defendants
intended to offer their homes as short-term vacation rentals or sell them to others who
would offer the homes as short-term rentals, instituted the present action by filing in
the Circuit Court for Garrett County a complaint for injunctive relief, damages and a
declaratory judgment.  The Lowdens named as defendants New Glen, MBC-TEK Lake
Properties, the Bosleys, the Clines, the Danseys, the Garrett County Board of County
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1
The new zoning regulations were adopted in August 2003 when Garrett County redefined
and regulated homes which qualified as  “transient vacation rental units” (TVRU).  The zoning law
defined a TVRU as follows:
“A building offering complete living facilities for one single family under one roof provided
that a maximum of 8 bedrooms and a maximum over night occupancy of two persons per
bedroom plus four additional persons will be permitted on the property and that the living
facilities are rented on the basis of a 14-day period or less to guests.  All living facilities
must be incorporated into the principal structure and no living quarters may be installed in
accessory buildings.”
The new zoning regulations defined “single family detached dwelling” as a “building commonly
known as a single-family house designed for and occupied exclusively as a residence having one
dwelling unit from ground to roof and open spaces on all sides . . . .”  The regulations further defined
a “dwelling unit” as a “dwelling or portion thereof providing complete living facilities for one
family,” and excluded “rooming, boarding or lodging houses or hotels, motels, tourist homes or other
similar places offering overnight accommodations for transients.”  In the Lake Residential District,
where the Stilwater Subdivision is located, the new zoning regulations allowed TVRU’s containing
up to five bedrooms “by right” and allowed the owner of homes containing six to eight bedrooms
to apply for a special exemption in order to qualify as a TVRU.  
Commissioners and the county planning and zoning agen cy.  The Lowdens’ principal
contention was that § 8.1 of the Declaration prohibited the rental of the homes on a
short-term basis because such use was contrary to a “single family residential purpose.”
The Lowdens further claimed that New Glen and the defendant lot owners were
prohibited from renting their properties under new zoning provisions applicable to the
Deep Creek Lake Watershed area and that seeking an exception under the new
regulations would breach § 8.1 of the covenant.1  The count against the County
Commissioners and the county zoning authorities was based upon the contention that
certain provisions of the Garrett County zoning laws were unconstitutional.  The
Lowdens subsequently dismissed their claim against the County Commissioners and the
local zoning agen cy, thereby abandoning the argument that certain provisions of the
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county zoning laws were unconstitutional.
The defendants MBC-TEK Lake Properties, the Bosleys and the Clines, built on
their lots homes containing eight bedrooms, and the Danseys built a home containing
seven bedrooms.  These defendants then entered into rental agreements with Railey
Mountain Lake Vacations, LLC, turning over control of rental rates, management, and
maintenance to Railey.  Railey offers these homes for rent as single rental units.
Although the rental agreements do not expressly prohibit unrelated people from renting
a home together, there is no evidence that any home was rented or offered for rental on
a room-to-room basis or to different families.  The advertisements state a rental price
for an entire home.
After answers to the complaint were filed, the defendants filed motions for
summary judgment and thereafter the plaintiffs filed a cross-motion for summary
judgment.  Both sides argued that the restrictive covenant in § 8.1 of the Declaration
was “clear and unambiguou s,” although they obviously differed as to the meaning of
the language “single family residential purposes” contained in the covenant.  
The defendants argued that the phrase “single family residential purposes”
basically meant that only single family homes could be constructed on the lots, and that
commercial buildings or motels could not be built on the lots.  The defendants also
argued that, to the extent the phrase referred to the use of a constructed single family
home, it “merely limit[ed] the use of the property to living purposes as distinguished
from business or commercial purposes.”  The defendants continued:
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“Even if the property is rented, it continues to be used for
residential purposes in compliance with the Declarations.  That a
single-family residence is rented as a vacation rental unit does not
change character of the improvement or its use for residential
purposes.  There still is no commercial enterprise being conducted
on any part of the property.”
With regard to the plaintiffs’ contention based on the new zoning ordinance, the
defendants pointed out that the Declaration of Covenants, Conditions and Restrictions
was “recorded among the Land Records of Garrett County” prior to the enactment of
the new zoning ordinance.  The defendants’ argument concluded:
“It is a widespread practice for owners of single-family residences
in and round Deep Creek Lake to rent them as vacation rentals.  If
a prohibition against such rentals actually had been contemplated
or intended, it would have been (and should have been) stated
clearly in the Declarations.  However, such a prohibition appears
neither in § 8.01 nor in any other section of the Declarations.  In
fact, the concept of vacation rentals is not mentioned in the
Declarations.”
The plaintiffs argued that the short-term rental of a home to a vacationer is “not
for residential purposes, but for business or commercial purposes.”  They also
contended that the restrictive covenant was violated because the homes “could” be
rented to “unrelated individuals.”  The plaintiffs, however, submitted no evidence that
any home had been or was then being rented to unrelated individuals.
The Circuit Court denied all motions for summary judgment, stating that “it
appears there exist disputes of material fact.”  Thereafter, a nonjury trial was held, at
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which the parties presented extrinsic evidence regarding the intent underlying the
“single family residential purposes” language in the Declaration of Covenants,
Conditions and Restrictions.
Along with numerous other witnesses and exhibits presented at trial, the court
heard the testimony of New Glen principal, Glen Adrian, who testified that his purpose
in requesting the Declaration to be drafted and recorded was to ensure that the
structures built upon the lots be restricted to single family homes and not townhouses,
condominiums, or businesses.  Mr. Adrian further testified that he had no intention of
limiting the owners’ rights to rent their homes on a short-term basis.  New Glen’s
attorney, Thomas Janes, who prepared the Declaration, also testified at trial that he has
prepared numerous other restrictive covenants in Garrett County using the same or
similar language and that none of those restrictive covenants were intended to limit the
property owner’s rights to rent the properties to vacationers on a short-term basis.  
Angela Lowden testified at trial as the sole witness for the plaintiffs.  She
testified that the Lowdens intended to purchase in a community which prohibited short-
term rentals to vacationers and that she believed that the “single family residential
purposes” language of the Declaration met that desire.  Mrs. Lowden stated that she and
her husband relied upon the advice of a Pennsylvania attorney and the plain language
of the Declaration in support of this belief that such short-term rentals to vacationers
were prohibited.  Mrs. Lowden further testified that she believed that a “seasonal
rental” was “probably permissible” but that short-term rentals were not allowed.
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2
In this Court, the Lowdens do not make the argument that the defendants’ homes are in violation
of the Garrett County zoning laws.
Following the one day trial, the Circuit Court, relying on the extrinsic evidence
and the language of the instrument, denied the plaintiffs’ requests for an injunction and
damages.  The court filed a written declaratory judgment stating that the defendants’
interpretation of the Declaration was correct and that short-term rentals to vacationers
were not prohibited by the Declaration.  
The Lowdens appealed to the Court of Special Appeals, and, before any
proceedings in the Court of Special Appeals, this Court issued a writ of certiorari.
Lowden v. Bosley, 389 Md. 398, 885 A.2d 823 (2005).  
The Lowdens argue, on this appeal, that the trial court erred by treating § 8.1 of
the Declaration as ambiguous and that the extrinsic evidence which was presented at
trial was erroneously considered.  The Lowdens maintain that § 8.1 of the Declaration
“is short, clear, direct and unambiguou s,” that the restrictive covenant clearly does not
“allow the short term rental use at issue in this case,” and that “renting” property is a
“commercial or business use” (appellants’ brief at 15, 19).  The Lowdens also argue
that, because the rental management agreements with Railey do not expressly require
that persons renting a home must be related, the “single family” portion of the
restrictive covenant was violated.  Alternatively, the Lowdens contend that the extrinsic
evidence at trial did not support the trial court’s finding with regard  to the intent
underlying the restrictive covenant.2
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II.
A.
This Court on numerous occasions has set forth the principles governing the
interpretation and application of restrictive covenants.  See, e.g., Miller v. Bay City
Property Ownership Association, 393 Md. 620, 903 A.2d 938 (2006); Roper v. Camuso,
376 Md. 240, 829 A.2d 589 (2003); County Commissioners v. St. Charles, 366 Md.
426, 784 A.2d 545 (2001); Belleview v. Rugby Hall, 321 Md. 152, 157, 582 A.2d 493,
495 (1990); Turner v. Brocato, 206 Md. 336, 111 A.2d 855 (1955); Himmel v. Hendler,
161 Md. 181, 155 A. 316 (1931); Maryland Coal Co. v. Cumberland and Penn. RR.,
41 Md. 343 (1873); Thruston v. Minke, 32 Md. 487 (1870).
As Judge Cathell for the Court recently emphasized in Miller v. Bay City
Property Ownership Association, supra, where the language of an instrument
containing a restrictive covenant is clear with regard to the controversy before the
court, there is no occasion to consider extrinsic evidence concerning the intent reflected
in the restriction.  The Court in Miller explained (393 Md. at 637, 903 A.2d at 948,
quoting Maryland Coal Co. v. Cumberland and Penn. R. R., supra, 41 Md. at 352):
“In determining the intent of the parties we must begin with the
actual language used in the [instrument]:  ‘If the intention of the
parties is plainly manifest upon the face of the instrument there is
no room for interpretation, and there is nothing left for the courts
but to carry into effect the intention of the parties so ascertained,
unless prevented from doing so by public policy or some
established principle of law.’”
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Moreover, a lack of ambiguity in the application of the restrictive covenant may be
gleaned or reinforced by other language in the instrument.  Miller, 393 Md. at 638, 903
A.2d at 948 (“It is also useful to look at the language used in the other sections of the
. . . deed”).
It is only where the restrictive covenant is ambiguous that courts venture beyond
the text of the instrument and consider extrinsic evidence.  Miller, 393 Md. at 634-637,
903 A.2d at 946-948; County Commissioners v. St. Charles, supra, 366 Md. at 445-448,
784 A.2d at 557.  In construing ambiguous restrictive covenants, this Court at one time
held that “a strict construction standard was applicable to promote the free alienability
of land,” that “the courts were to hold the restriction to its narrowest limits,” and that
the ambiguity should be resolved in favor of the unrestricted use of the property.
St. Charles, 366 Md. at 445-446 and n.17, 784 A.2d at 556-557 and n.17.  More
recently, however, “Maryland courts no longer apply a pure strict interpretation or
construction, but apply rather, a reasonably strict construction when construing
covenants.”  St. Charles, 366 Md. at 447, 784 A.2d at 557.  The “reasonab ly strict
construction” principle was explained in Belleview v. Rugby Hall, supra, 321 Md. at
157-158, 582 A.2d at 495:
“If the meaning of the instrument is not clear from its terms, ‘the
circumstances surrounding the execution of the instrument should
be considered in arriving at the intention of the parties, and the
apparent meaning and object of their stipulations should be
gathered from all possible sources.’
* * *
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“If an ambiguity is present, and if that ambiguity is not clearly
resolved by resort to extrinsic evidence, the general rule in favor
of the unrestricted use of property will prevail and the ambiguity
in a restriction will be resolved against the party seeking its
enforcement.”
B.
Although we agree with the Circuit Court’s judgment, including the declaration
that short-term rentals to vacationers are not prohibited, our reasoning differs
somewhat from that of the Circuit Court.  In our view, the Declaration of Covenants,
Conditions and Restrictions, applicable to the Stilwater subdivision, on its face does
not prohibit the short-term rental of a defendant’s home to a single family which
resides in the home.  Unlike the Circuit Court, we find no ambiguity with respect to this
issue.  Consequently, we have no occasion to consider the extrinsic evidence relating
to intent. 
The crux of the Lowdens’ argument is that a homeowner’s use of his or her home
“primarily to make money” by renting it does not constitute a “‘residential’ use,” even
though the tenant uses the home as a residence for a short term.  (Appellants’ brief at
18).  The Lowdens assert that “‘residential’ use” excludes “rental.”  (Id. at 19).
According to the Lowdens, the defendant-hom eowners are engaged in “the commercial
or business use of renting.”  (Ibid.).
Section 8.1 of the Declaration of Covenants, Conditions and Restrictions
provides that “lots” in the Stilwater subdivision shall be used for “residential
purposes,” and § 2.7 of the Declaration expressly recognizes that any owner of the lots
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may have “tenants.”  The only restrictions upon “residential” use in § 8.1 are the
“single family” limitation and the prohibition against temporary structures such as
tents, trailers, campers, etc.  When the owner of a permanent home rents the home to
a family, and that family, as tenant, resides in the home, there obviously is no violation
of the Declaration.  While the owner may be receiving rental income, the use of the
property is unquestionably “residential.”  The fact that the owner receives rental
income is not, in any way, inconsistent with the property being used as a residence.
The Lowdens, by focusing entirely upon the owner’s receipt of rental income, ignore
the residential use by the tenant.  
“Residential use,” without more, has been consistently interpreted as meaning
that the use of the property is for living purposes, or a dwelling, or a place of abode.
See 43 A.L.R. 4th 71, 76.  The word “residential” has been applied to apartment
buildings, fraternity houses, hotels, and bed-and-breakfasts, because such structures are
used for habitation purposes.  See Eisenstadt v. Barron, 252 Md. 358, 367-368, 250
A.2d 85, 90 (1969) (“There can be no question but that the apartment use . . . on the
adjoining land is a residential use”).  See also City of Baltimore v. Poe, 224 Md. 428,
168 A.2d 193 (1961); Baker v. Smith, 242 Iowa 606, 47 N.W.2d 810 (1951); Mullin v.
Silvercreek Condominium, Owner’s Assoc., Inc., 195 S.W.3d 484 (Mo. App. 2006).
The transitory or temporary nature of such use does not defeat the residential status.
See Pinehaven Planning Board v. Brooks, 138 Idaho 826, 70 P.3d 664 (2003).   What
may exclude fraternity houses, hotels, motels, boarding houses, and bed-and-breakfasts
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3
Many of these out-of-state cases involve the use of homes for bed-and-breakfasts, tourist houses,
boarding houses, and similar uses where many unrelated persons or families rent rooms or portions
of the same structure.  Some of the holdings seem to be based on the “single family” restriction.  See,
e.g., Fick v. Weedon, 244 Ill.App.3d 413, 613 N.E.2d 362 (1993); O’Connor v. Resort Custom
Builders, 459 Mich. 335, 591 N.W.2d 216 (1998); Bruni v. Thacker, 120 Or. App. 560, 853 P.2d 307
(1993); Carr v. Trivett, 24 Tenn. App. 308, 143 S.W.2d 900 (1940); Deitrich v. Leadbetter, 175 Va.
170, 8 S.E.2d 276 (1940). 
4
See United States Census Bureau, Home Ownership Rates by State: 1984 to 2005; USA
MapStats/Maryland, at http://www.fedstats.gov/qf/states/2404000.html (October 3, 2006).  In
Baltimore City, almost 50 per cent of families rent their homes rather than own them.  Ibid.
under § 8.1 of the Declaration of Covenants, Conditions and Restrictions is not the
“residential purposes” language of § 8.1; instead, if they are excluded, it would be the
“single family” language of § 8.1 which would accomplish such result.
The Lowdens, as well as some of the out-of-state cases on which they rely, seem
to view the owner’s receipt of income from a residential tenant as inconsistent with
“residential” use.3  There is no inconsistency.  The owners’ receipt of rental income in
no way detracts from the use of the properties as residences by the tenants.  There are
many residential uses of property which also provide a commercial benefit to certain
persons.  Both in Maryland and in a great majority of other states, over 30 percent of
homes are rented rather than owned by the families residing therein, thus providing
much rental income to landlords.4  In addition to conventional rentals, a commercial
benefit may be realized from residential property by persons or entities holding ground
rents, mortgages, or deeds of trust.  When property is used for a residence, there simply
is no tension between such use and a commercial benefit accruing to someone else.
In fact, not even the Lowdens argue that § 8.1 of the Declaration of Covenants,
Conditions and Restrictions generally prohibits rentals to single families residing in the
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rented homes.  The Declaration itself expressly permits delegation of certain owner
rights to “tenants.”  Instead, the Lowdens’ argument is that § 8.1 just prohibits “short-
term rentals.”  (Appellants’ brief at 13, 18).  Nevertheless, there is utterly nothing in
the language of the Declaration which provides any basis for drawing a distinction
between long-term rentals and short-term rentals.  Moreover, at what point does the
rental of a home move from short-term to long-term: a week?  a month?  a season?
three months?  six months?  one year? or several years? 
The Lowdens’ principal reliance is upon a zoning case, Keseling v. Mayor and
City Council of Baltimore, 220 Md. 263, 151 A.2d 726 (1959).  Keseling involved a
building in Baltimore City which was divided into several apartments, several rooms
rented to individual roomers or boarders, and a real estate office.  The structure was in
a “Residential and Office Use District,” and the applicable zoning ordinance expressly
“prohibit[ed] business uses” other than an office.  Keseling, 220 Md. at 268, 151 A.2d
at 728.  Because the ordinance expressly “prohibit[ed] the use of the property for
business purposes,” and “in the light of its [the ordinance’s] history,” this Court held
that the renting of the individual rooms to boarders or roomers violated the business
prohibition.  Keseling, 220 Md. at 268-269, 151 A.2d at 729.  The Keseling opinion did
not hold that, in the absence of an express prohibition of business or commercial
activity, the renting of rooms to boarders or roomers would not be a “residential” use.
The case at bar is clearly distinguishable from Keseling.  In the present case,
there is no prohibition of any business or commercial use or benefit.  If there were such
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an express prohibition, our analysis would be different or the Declaration might be
deemed ambiguous.  Under the wording of the Declaration in this case, however, as
long as a tenant’s use of a home in the Stilwater subdivision is residential, a
commercial benefit accruing to the landlord-owner is not prohibited.  To reiterate, there
is no inherent inconsistency between a residential use by a tenant and a commercial
benefit for the landlord. 
Other states have interpreted the term “residential” in similar contexts and have
arrived at the same conclusion we reach here.  Pinehaven Planning Board v. Brooks,
supra, 138 Idaho 826, 70 P.3d 664; Mullin v. Silvercreek Condominium Owners Assoc.,
supra, 195 S.W.3d 44.  In Pinehaven, the Supreme Court of Idaho examined whether
restrictive covenants established for a planned community of single family homes
prohibited the short-term rental of the homes.  The covenants restricted the use of the
property to residential use and, unlike the Declaration in the present case, did prohibit
commercial or business ventures or uses.  The Supreme Court of Idaho held that, “as
a matter of law, the Covenants are unambiguous and clearly allow the rental of
residential property for profit.”  Pinehaven, 138 Idaho at 829, 70 P.3d at 667.  In
construing the covenants, the Idaho Supreme Court stated (138 Idaho at 830, 70 P.3d
at 668):
“Renting the property for residential purposes, whether short or
long-term, does not fit within these prohibitions.  The only building
on the Brooks’ property remains a single-family dwelling and
renting this dwelling to people who use it for the purposes of
eating, sleeping, and other residential purposes does not violate the
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prohibition on commercial and business activity as such terms are
commonly understood.
*          *          *
“[T]he rental of residential property for residential purposes is
more appropriately deemed residential as opposed to business use.
Thus, the Covenants do not prohibit the rental of residential
property, whether such rental is short or long term.”
The court in Pinehaven, supra, went on to point out that the cases from some other
jurisdictions, which have defined the term “residential” to restrict rentals, adopt an
“exceedingly narrow definition” of the term, which the Idaho Supreme Court declined
to adopt.  Ibid.
Similarly, the Missouri Court of Appeals, in Mullin v. Silvercreek Condominium
Assoc., supra, held that a restrictive covenant which stated:  “All units and restricted
common elements shall be used, improved and devoted exclusively to residential use
by a single family”did not prohibit nightly rentals of the units.  195 S.W.3d at 487-488.
That court, holding that the restrictive covenant was clear and unambiguous, defined
the term “residential purposes” as follows (195 S.W.3d at 490):
 “‘[O]ne in which people reside or dwell, or which they make
homes . . . .’  Stated another way, the unit owners’ use of their units
and restricted common elements must be for the purpose of
residing or dwelling there, or in a manner making the realty a home
. . . .”
C.
The Lowdens also argue that, because there is no provision in the rental
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management agreements expressly stating that the tenants renting a particular home
must be related, the “single family” portion of § 8.1 of the Declaration was violated.
On the other hand, there is nothing in the rental management agreements stating that
several separate and distinct families, or unrelated individuals, may rent a particular
home at the same time.  The agreements are simply silent on this issue.
Nevertheless, as previously indicated, no evidence was submitted, either in
connection with the summary judgment motions or at the trial, that any home had been
or was then being rented to different families or to unrelated individuals.
Consequently, there was no basis for the Circuit Court to have found a violation of the
“single family” provision, and the court properly declined to make such a finding.  It
is not an issue generated by the evidence in the case, and we have no occasion to
explore the meaning or application of the “single family” restriction.
In sum, §  8.1's provision allowing a lot to “be used for single family residential
purposes,” particularly when coupled with the Declaration’s express allowance of
“tenants,” plainly permits a rental to a single family residing in the home, whether the
rental is for a “short” term or a “long” term.  If the framers of the Declaration had
intended to prohibit rentals shorter than a certain period, they would have said so, just
as they prohibited tents, trailers, campers, etc.  Because the unambiguous language of
the Declaration allows rentals for single family residential use, the judgment below
must be affirmed. 
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JUDGMENT 
OF 
THE 
CIRCU IT
COURT FOR GARRETT COUNTY
AFFIRMED.  APPELLANTS TO PAY
COSTS.
Judge Wilner concurs in the judgment only.