#29307-a-SRJ

2021 S.D. 37

IN THE SUPREME COURT

OF THE

STATE OF SOUTH DAKOTA

* * * *

ROBERT WILSON AND SHARLENE

WILSON, Husband and Wife, Plaintiffs and Appellants,

v.

RORY MAYNARD AND KRISTEN

MAYNARD, Husband and Wife, Defendants and Appellees,

* * * *

APPEAL FROM THE CIRCUIT COURT OF

THE FOURTH JUDICIAL CIRCUIT

LAWRENCE COUNTY, SOUTH DAKOTA

* * * *

THE HONORABLE MICHELLE K. COMER

Judge

* * * *

LONNIE R. BRAUN of

Thomas, Braun, Bernard

 & Burke, LLP

Rapid City, South Dakota

DWYER ARCE of

Kutak Rock, LLP

Omaha, Nebraska Attorneys for plaintiffs and

appellants.

STEVEN J. MORGANS of

Myers Billion, LLP

Sioux Falls, South Dakota Attorneys for defendants and

appellees.

* * * *

CONSIDERED ON BRIEFS

NOVEMBER 16, 2019

OPINION FILED 06/16/21
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JENSEN, Chief Justice

[¶1.] Rory and Kristen Maynard (Maynards) built a home in a residential 

development near Deadwood, South Dakota, and rented the home to short-term 

guests. The owners of an adjacent property, Robert and Sharlene Wilson (Wilsons), 

sued Maynards alleging that Maynards violated restrictive covenants limiting use 

of properties in the development to “residential purposes.” The circuit court granted 

summary judgment in favor of Maynards, holding that short-term rentals were a 

residential purpose, and denied Wilsons’ request for injunctive relief. We affirm.

Facts and Procedural History

[¶2.] In the early 1990s, Jon Mattson purchased a 160-acre tract of land 

near Deadwood, South Dakota. He divided the land into 33 lots and created a 

residential development called Shirt Tail Gulch subdivision. In 1997, Mattson 

established a declaration of restrictive covenants (Covenants), which were filed with 

the Lawrence County Register of Deeds, for purchasers of Lots 1 to 31 in the 

subdivision. The stated purpose of the Covenants was for “creating and keeping the 

above described property, insofar as possible, desirable, attractive, free from 

nuisance . . . for the mutual benefit and protection of the owners of all lots, and the 

surrounding and adjacent property.”

[¶3.] Among the Covenants’ 32 provisions, the provision central to this case 

states:

No lot may be used except for residential purposes, which shall 

include normal home occupations and offices of recognized 

professions and bed and breakfast uses allowed under State and 

County laws and regulations.
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Another provision states that “[a]ll construction shall be new construction and shall 

be restricted to family or residential recreation type dwellings and attached or 

detached garages.” The Covenants may be amended by a majority vote of the 

subdivision lot owners.

[¶4.] In 2007, Wilsons purchased a home on Lot 25 of Shirt Tail Gulch 

subdivision. Wilsons intended to use the home as a vacation home and eventually 

as a retirement home. In 2016, Maynards bought Lot 24, which was adjacent to 

Wilsons’ home.

[¶5.] In the summer of 2016, Maynards began construction of a three-story 

home (Property) with five master bedrooms, five master bathrooms, and a half-bath 

on the lot. The Property could house up to fourteen people. Maynards intended to 

rent the Property to short-term guests for profit. Maynards also owned several 

other commercial rental properties and hotels in the Deadwood and Lead area. 

They owned and operated two real estate holding companies, Legendary 

Investments and Alpine Adventures, to manage their rental properties.

[¶6.] In October 2016, Wilsons’ attorney sent a letter to Maynards 

requesting that Maynards provide assurance that they did “not intend to use the 

[P]roperty in any manner that violates the Covenants, for instance by using it as a 

rental property.” Maynards did not respond to the letter and continued 

construction. In April 2017, Rory Maynard told Robert Wilson that Maynards 

intended to rent the Property to short-term guests and did not intend to use the 

Property for a bed and breakfast business.
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[¶7.] Wilsons filed this action for declaratory judgment in May 2017, seeking 

a determination that Maynards’ use of the Property for short-term rental income 

was prohibited by the Covenants. Wilsons also sought temporary and permanent 

injunctive relief prohibiting Maynards from renting the Property on a short-term 

basis. Following a hearing, the circuit court determined that Wilsons had not 

established that they would suffer irreparable harm and denied their motion for a 

preliminary injunction.

[¶8.] In June 2018, Maynards began renting the Property to short-term 

guests. They used several vacation rental websites to advertise the Property. On 

one of the websites, they advertised that the Property was “built with large groups 

in mind.” Maynards testified that they use various social media platforms to “make 

a determination of who the [renters] are before we rent to them.” Maynards stay at 

the Property a few nights a year, but it is undisputed that they primarily use the 

Property for short-term rentals.

[¶9.] Maynards rented the Property nine times in 2018. In 2019, they 

rented the Property nearly every day between June and September. During the 

2018 and 2019 Sturgis Motorcycle Rallies, they rented the Property to twelve guests 

at once; and the Property has housed as many as twenty guests at a time. 

Maynards charge $500 for weekday stays, $650 for weekend stays, and up to $1,200 

per day during the Sturgis Rally.

[¶10.] In November 2019, Wilsons and Maynards both moved for summary 

judgment. Wilsons argued short-term rentals were “an unambiguously commercial 

purpose” that violated the residential purpose provision of the Covenants. 
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Maynards argued that short-term rentals were a residential purpose consistent 

with the Covenants.

[¶11.] Following a hearing, the circuit court denied Wilsons’ motion for 

summary judgment and granted Maynards’ motion. The court concluded the 

language of the Covenants was unambiguous and looked within the “four corners” of 

the Covenants to determine whether short-term vacation rentals were a “residential 

purpose.” It held that the Property’s “design [and use] for residential recreational 

activities such as cooking, eating, drinking, sleeping, and gathering” was consistent 

with “residential purposes.” Additionally, the court determined that the renters’ 

use of the Property for eating, sleeping, and other ordinary living activities was a 

“normal home occupation” permitted by the Covenants. In the court’s view, the fact 

that Maynards earned profit from renting the Property did not change the 

residential character of how renters used and enjoyed the Property, and nothing in 

the Covenants prohibited short- or long-term rentals or restricted the number of 

guests. The court further concluded that the Covenants expressly allowed the 

Property to be rented on a short-term basis because it permitted “bed and 

breakfast” businesses.

[¶12.] The circuit court also rejected Wilsons’ argument that vacation rentals 

violated the Covenants’ purpose to keep the subdivision free from nuisance. It held 

that “associated traffic” from renters “should be expected in any neighborhood.” 

Short-term rental of the Property was not a nuisance merely because “the 

individuals occupying [it] differ on a given night.” The court also held that 

Maynards complied with the Covenants’ provision requiring construction of only 
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“family or residential recreation type dwelling[s]” because “[n]othing about the 

character of the [Property] suggests that it was not designed for families to occupy.”

[¶13.] Wilsons appeal, arguing that the circuit court erred in holding shortterm rentals did not violate the Covenants. Wilsons also claim that the circuit court 

erred in denying their request for a permanent injunction preventing Maynards 

from renting the Property.

Analysis and Decision

[¶14.] “We review grants of summary judgment under the de novo standard 

of review. We decide whether genuine issues of material fact exist and whether the 

law was correctly applied[, and w]e will affirm a circuit court’s decision so long as 

there is a legal basis to support its decision.” State v. BP plc, 2020 S.D. 47, ¶ 18, 

948 N.W.2d 45, 52 (internal citations omitted). “The [circuit] court’s interpretation 

of a covenant is a legal question which we review de novo.” Jackson v. Canyon Place 

Homeowner’s Ass’n, Inc., 2007 S.D. 37, ¶ 7, 731 N.W.2d 210, 212.

[¶15.] “The interpretation of a restrictive covenant involves the same rules of 

construction for contract interpretation. When the wording of the covenant is 

unambiguous, ‘its meaning must be determined from the four corners of the 

instrument without resort to extrinsic evidence of any nature.’” Id. ¶ 9. “[A] 

covenant is ambiguous if we have a genuine uncertainty as to which of two or more 

meanings is correct.” Id. When language of a restrictive covenant is unambiguous, 

we consider the plain meaning of the words in the covenant. See id. ¶ 14; Coffey v. 

Coffey, 2016 S.D. 96, ¶ 8, 888 N.W.2d 805, 809.
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[¶16.] Wilsons cite Edwards v. Landry Chalet Rentals, LLC in support of 

their argument that short-term rentals of the Property are not a “residential 

purpose” under the language of the Covenants. 246 So. 3d 754, 756 (La. Ct. App. 

2018). In Edwards, restrictive covenants provided that “[n]o lot shall be used 

except for residential purposes” and also specifically prohibited commercial uses, 

stating that “[n]o lot shall be used for any commercial purpose . . . .” Id. at 755. The 

Edwards court held that short-term vacation rentals of a single-family dwelling on 

a lot were not a residential purpose because the renters were transient and because 

the defendant’s rental of the property for “ongoing profit-making activity” was a 

commercial purpose. Id. at 758.

[¶17.] Maynards respond that Edwards is distinguishable because the 

Covenants explicitly permit some commercial or profit-making activity. Further, 

Maynards ask this Court to adopt the majority view of “dozens of courts around the 

country” that have held use of a property for eating, sleeping, and recreation for any 

duration is determinative as to whether the property is used for “residential 

purposes,” regardless of the property owner’s receipt of rental income.

[¶18.] “[C]ourts in a number of other states . . . have almost uniformly held 

that short-term vacation rentals do not violate restrictive covenants” that “requir[e] 

property to be used only for residential purposes and prohibiting its use for business 

purposes . . . .” Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord, 219 So. 3d 

111, 114 (Fla. Dist. Ct. App. 2017) (citing cases from thirteen jurisdictions that have 

held restrictive covenants limiting the use of a property to “residential purposes” do 

not prohibit short-term rentals). “If a vacation renter uses a home for the purposes 
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of eating, sleeping, and other residential purposes, this use is residential, not 

commercial, no matter how short the rental duration.” Wilkinson v. Chiwawa 

Communities Ass’n, 327 P.3d 614, 620 (Wash. 2014).

[¶19.] Courts have consistently reached this conclusion regardless of whether 

they determine the language “residential purposes” to be ambiguous or 

unambiguous. Some “courts have found no ambiguity [in ‘residential purposes’], 

reasoning that, as long as the property is used for living purposes, it does not cease 

being ‘residential’ simply because such use [for short-term rentals] is transitory 

rather than permanent.” Houston v. Wilson Mesa Ranch Homeowners Ass’n, Inc., 

360 P.3d 255, 259 (Colo. App. 2015). The duration of the rental has no bearing on 

whether or not the property is used for “residential purposes.” See, e.g., Tarr v. 

Timberwood Park Owners Ass’n, Inc., 556 S.W.3d 274, 291 (Tex. 2018); Wilkinson, 

327 P.3d at 620; Lowden v. Bosley, 909 A.2d 261, 268 (Md. 2006); Slaby v. Mountain 

River Estates Residential Ass’n, Inc., 100 So. 3d 569, 579 (Ala. Civ. App. 2012).

[¶20.] Other “courts have recognized ambiguity in [‘residential purposes’] in 

cases involving short-term rentals or other situations where those residing in the 

property are living there only temporarily, not permanently . . . .” Tarr, 556 S.W.3d 

at 289. Nonetheless, “[t]hese courts [have] concluded that, because ambiguities in 

restrictive covenants [are] to be construed in favor of the free use of property, shortterm rentals [are] not precluded as inconsistent with residential use.” Houston, 360 

P.3d at 258-59. See, e.g., Mullin v. Silvercreek Condo. Owner’s Ass’n, Inc., 195 

S.W.3d 484, 490 (Mo. Ct. App. 2006); Dunn v. Aamodt, 695 F.3d 797, 801-02 (8th 
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Cir. 2012); Pinehaven Plan. Bd. v. Brooks, 70 P.3d 664, 667 (Idaho 2003); Russell v. 

Donaldson, 731 S.E.2d 535, 538-39 (N.C. Ct. App. 2012).

[¶21.] Here, neither party claims the Covenants are ambiguous. However, 

Maynards argue that if this Court determines the Covenants are ambiguous, then 

they must be strictly construed. See generally Luedke v. Carlson, 73 S.D. 240, 243, 

41 N.W.2d 552, 554 (1950) (stating restrictive covenants should be strictly 

construed). Wilsons cite Piechowski v. Case for the contrary proposition that this 

Court does not require restrictive covenants to be strictly construed. 255 N.W.2d 

72, 74 n.2 (S.D. 1977) (“We regard as dicta only, our statement in Luedke v. Carlson

. . . that restrictive covenants (imposed upon a residential subdivision) are to be 

strictly construed in favor of the free use of property.”).

[¶22.] We agree with the view of both parties that “residential purposes” is 

unambiguous. While the Covenants do not define “residential purposes,” “failing to 

define terms does not automatically result in an ambiguity.” Jackson, 2007 S.D. 37, 

¶ 11, 731 N.W.2d at 213. An undefined term in a restrictive covenant “is not 

ambiguous if the term has a plain and ordinary meaning and that meaning can be 

defined.” Halls v. White, 2006 S.D. 47, ¶ 8, 715 N.W.2d 577, 581. “We may use 

statutes and dictionary definitions to determine the plain and ordinary meaning of 

undefined words.” Jackson, 2007 S.D. 37, ¶ 11, 731 N.W.2d at 213.

[¶23.] The word “residential” is commonly understood to pertain to “dwelling 

in a place for some time.” Residence, MERRIAM-WEBSTER, https://www.merriamwebster.com/dictionary/residence (last visited Apr. 19, 2021). Therefore, 

“residential purposes” may be plainly understood to include the occupation of a 
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home or dwelling for an indefinite length of time. We decline Maynards’ request to 

strictly construe the Covenants. Instead, we rely on our normal rules of contract 

construction to conclude the plain language of “residential purposes” includes shortterm rentals. See Jackson, 2007 S.D. 37, ¶ 9, 731 N.W.2d at 212 (applying our 

normal rules of contract construction to a restrictive covenant). See also Halls, 2006 

S.D. 47, ¶ 7, 715 N.W.2d at 580; Harlan v. Frawley Ranches PUD Homeowners 

Ass’n, Inc., 2017 S.D. 54, ¶ 7, 901 N.W.2d 747, 750.

[¶24.] The dissent does not suggest any other meaning for the language 

“residential purposes,” nor does it offer any contrary authority to the multitude of 

cases that have held short-term rentals of a home are a “residential purpose.” 

Rather, the dissent suggests that since the Covenants apply to owners of homes in 

the subdivision, the owner must live in the home to comply with the Covenants’ 

“residential purposes” provision.1 “[W]hen reading the Covenant in its entirety, it is 

apparent that the fourth article in the Covenant applies to the owner’s use of Lot 

24.” Dissenting Opinion ¶ 39. There is no question that the Covenants apply to the 

owners, but the dissent’s reading of this provision would prohibit a homeowner from 

leasing the home or allowing someone other than the owner to live in the Property. 

This interpretation simply cannot be countenanced under the plain language of the 

Covenants.

 

1. The dissent borrows the word “owners” from the preamble of the Covenants 

to suggest that only owners may use the Property for “residential purposes.” 

However, the language concerning “present and future owners” in the 

preamble merely demonstrates the Covenants’ intent to run with the land 

and benefit all present and future owners. A reading of this plain language 

does not remotely suggest that the Covenants also require every home in the 

subdivision to be owner-occupied.
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[¶25.] Wilsons ask this Court to conclude the receipt of rental income 

transforms a property’s use from residential to strictly commercial. Yet, virtually 

every other jurisdiction that has examined this issue has held “that receipt of 

income does not transform residential use of property into commercial use.” 

Houston, 360 P.3d at 260. “When property is used for a residence, there simply is 

no tension between such use and a commercial benefit accruing to someone else.” 

Lowden, 909 A.2d at 267-68. “[T]he critical issue is whether the renters are using 

the property for ordinary living purposes such as sleeping and eating . . . . [T]he 

nature of a property’s use is not transformed from residential to business simply 

because the owner earns income from the rentals.” Santa Monica Beach Prop. 

Owners Ass’n, Inc., 219 So. 3d at 114-15. See, e.g., Wilkinson, 327 P.3d at 620; 

Dunn, 695 F.3d at 801-02; Slaby, 100 So. 3d at 580; Tarr, 556 S.W.3d at 291-92; 

Pinehaven Plan. Bd., 70 P.3d at 667-68; Russell, 731 S.E.2d at 539.

[¶26.] We agree with these nearly universal holdings from other jurisdictions. 

The Covenants’ “residential purposes” provision does not prohibit Maynards from 

profiting by renting to guests who use the Property as a short-term residence. If the 

Covenants intended “residential purposes” to prohibit profit-making activity as 

Wilsons and the dissent suggest, then the Covenants would even prohibit a longterm lease of the Property that generates a profit. There is nothing in the 

Covenants that suggests a home owner in Shirt Tail Gulch may not lease a 

residence on a short- or long-term basis, or that limits the occupancy of a home to a 

single-family.
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[¶27.] Finally, Wilsons and the dissent also focus on the language of the 

Covenants, which states that “residential purposes . . . shall include [1] ordinary 

home occupations and [2] offices of recognized professions and [3] bed and breakfast 

uses . . . .”2 They argue that Maynards’ use of the Property does not fit within any 

of these additional commercial uses permitted by the Covenants. However, the 

resolution of this case does not turn on whether Maynards’ use fits within any of 

these three uses. Rather, the use of the Property is not prohibited by the Covenants 

because it is consistent with the common meaning of “residential purposes.”

[¶28.] Moreover, the Covenants’ inclusion of these three uses does not limit 

the meaning of “residential purposes.” Rather, these enumerated uses expand it. 

See Am. Sur. Co. of New York v. Marotta, 287 U.S. 513, 517, 53 S. Ct. 260, 261, 77 L. 

Ed. 466 (1933) (“‘[I]nclude’ is frequently, if not generally, used as a word of 

extension or enlargement rather than as one of limitation or enumeration.”). If the 

Covenants were intended to confine the scope of “residential purposes,” the 

Covenants could have included additional language to do so. “[O]ur well-

 

2. Courts have generally held that “home occupations . . . are those 

[occupations] ‘customarily’ associated with residential dwellings” and that 

may be “appropriate” to base out of a residence. Agnew v. Bushkill Twp. 

Zoning Hearing Bd., 837 A.2d 634, 638 (Pa. Commw. Ct. 2003). Some 

examples include an animal exhibition business, In re Salton v. Town of 

Mayfield Zoning Bd. of Appeals, 983 N.Y.S.2d 656, 658-59 (N.Y. App. Div. 

2014), and an operation of a commercial trucking business, Stevens v. City of 

Island City, 324 P.3d 477, 480 (Or. Ct. App. 2014). SDCL 34-18-9.1(1) defines 

a “‘[b]ed and breakfast establishment,’ [as] any building or buildings run by 

an operator which is used to provide accommodations for a charge to the 

public, with at most five rental units for up to an average of ten guests per 

night and in which family style meals are provided . . . .” To be clear, the 

Court does not suggest that Maynards’ use of the Property for vacation 

rentals is a “normal home occupation,” an “office of recognized professionals,” 

or a “bed and breakfast.”
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established rule [is] that in ascertaining the parties’ intent, we will not rewrite [a 

contract or covenant] or add to its language.” Edgar v. Mills, 2017 S.D. 7, ¶ 29, 892 

N.W.2d 223, 231.

[¶29.] It is undisputed the Property is used to eat, sleep, and enjoy 

recreational activities. Therefore, short-term vacation rentals are a residential 

purpose consistent with the Covenants. Maynards’ construction of a multi-bedroom 

vacation home on the Property is also consistent with the provision in the 

Covenants requiring construction of only “family or residential recreation type 

dwellings.” Finally, Wilsons failed to make any showing that short-term rentals of 

the Property “fundamentally alter the character of Shirt Tail Gulch.” Because 

Maynards did not breach the Covenants, the circuit court properly granted their 

motion for summary judgment and denied Wilsons’ motion for injunctive relief.

[¶30.] We affirm.

[¶31.] GILBERTSON, Retired Chief Justice, and KONENKAMP, Retired 

Justice, concur.

[¶32.] KERN and DEVANEY, Justices, dissent.

[¶33.] KONENKAMP, Retired Justice, sitting for SALTER, Justice, 

disqualified.

[¶34.] MYREN, Justice, not having been a member of the Court at the time 

this action was submitted to the Court, did not participate.
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KERN, Justice (dissenting).

[¶35.] While I agree that the Covenants’ language is unambiguous, I disagree

with the majority’s interpretation allowing the Maynards to engage in what is 

undoubtedly a prohibited commercial endeavor. Such a reading ignores the 

provisions of the Covenants, which must be read as a whole to provide context and 

definition for the “residential purposes” provision.

[¶36.] Regarding the term “residential purposes,” much of the circuit court’s 

opinion and the Maynards’ brief focus on how the renters use the three-story house 

in question. However, this analysis fails to consider the Covenants as a whole and 

instead defines the term in isolation. The fourth declaration in the Covenants 

provides:

No lot may be used except for residential purposes, which shall 

include normal home occupations and offices of recognized 

professions and bed and breakfast uses allowed under State and 

County laws and regulations.

[¶37.] “Contract interpretation is a question of law reviewed de novo.” 

Charlson v. Charlson, 2017 S.D. 11, ¶ 16, 892 N.W.2d 903, 907 (citation omitted). 

“In order to ascertain the terms and conditions of a contract, we examine the 

contract as a whole and give words their plain and ordinary meaning.” Id. ¶ 16, 892 

N.W.2d at 908. “We are required to give effect to the language of the entire 

contract, and particular words and phrases are not interpreted in isolation.” Jones 

v. Siouxland Surgery Ctr. Ltd. P’ship, 2006 S.D. 97, ¶ 15, 724 N.W.2d 340, 345 

(citation omitted).

[¶38.] In South Dakota, “servitude[s] should be interpreted to give effect to 

the intention of the parties ascertained from the language used in the 
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instrument[.]” Brandt v. Cnty. of Pennington, 2013 S.D. 22, ¶ 13, 827 N.W.2d 871, 

875 (quoting Restatement (Third) of Property (Servitudes) § 4.1(1) (2000)). “The 

rule that servitudes should be interpreted to carry out the intent of the parties and 

the purpose of the intended servitude departs from the often expressed view that 

servitudes should be narrowly construed to favor the free use of land.” Restatement 

(Third) of Property (Servitudes) § 4.1 cmt. a (2000). This rule “is based in the 

recognition that servitudes are widely used in modern land development and 

ordinarily play a valuable role in utilization of land resources. The rule is 

supported by modern case law.” Id.

[¶39.] In keeping with this standard of review and by examining the entire 

document, the proper context of the fourth declaration in the Covenants is more 

fully understood.3 Notably, before the list of Covenants, an introductory preamble 

provides:

The following declarations constitute covenants to run with the 

land and with the above described property, and shall be 

binding upon all parties and persons having an interest in said 

property, for the benefit of and limitations on all present and 

future owners of said property, so long as said declarations 

remain in effect as hereinafter provided.

(Emphasis added.) Likewise, the first declaration of the Covenants provides in part 

that the Covenants, “shall inure to the benefit of each owner thereof, and for the 

further purpose of creating and keeping the above-described property, insofar as 

possible, desirable, attractive, free from nuisance and suitable in architectural 

 

3. See Tarr, 556 S.W.3d at 289 (reasoning “‘residence’ is a term of multiple 

meanings” . . . but “the appropriate meaning can be discerned from ‘the 

context in which it is used’” (citations omitted)).
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design, materials and appearance, and for the purpose of guarding against fires and 

unnecessary interference with the natural beauty of the lots, for the mutual benefit 

and protection of the owners of all lots, and the surrounding and adjacent property.” 

(Emphasis added.) Therefore, when reading the Covenants in its entirety, it is 

apparent that the fourth article in the Covenants applies to the owner’s use of Lot 

24.4 The recitals within the Covenants are valuable in discerning the intended 

limitations the Covenants placed on the uses of the lots. See Jennings v. Rapid City 

Reg’l Hosp., Inc., 2011 S.D. 50, ¶ 11, 802 N.W.2d 918, 922 (reasoning that the 

recitals in a contract showed the contracts’ clearly expressed intent to benefit 

employees.)

[¶40.] To support its contrary interpretation, the majority opinion focuses on 

how the renters use the property. And the primary authority relied upon by the 

majority is based upon this same interpretation. The majority relies on Santa 

Monica Beach Property Owners Association, Inc. for the proposition that when 

“determining whether short-term vacation rentals are residential uses of the 

property, the critical issue is whether the renters are using the property for ordinary 

living purposes such as sleeping and eating[.]” 219 So. 3d at 114 (emphasis added) 

(citations omitted); see also Majority Opinion ¶ 25. Even though other courts have 

read covenants this way, borrowing that interpretation here, would violate the 

 

4. The majority opinion claims that this language merely shows the Covenants’

intent to run with the land and benefit all present and future owners. While 

this is true, it cannot be denied that the language also shows the intent to 

enforce the Covenants’ provisions as “limitations on all present and future 

owners[.]” (Emphasis added.) The Maynards’ status as owners of Lot 24 

places them under the obligation to use Lot 24 for residential purposes.
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plain, unambiguous language of the Covenants at issue here and the canon of 

construction, which prohibits courts from reading the provisions of the Covenants in 

isolation.

[¶41.] Moreover, the Maynards admit in their brief that they “are not aware 

of any reported case that has involved similar language as paragraph four of the 

Covenants.” This is not surprising. Not only do all covenants differ, but so do the 

ordinances, state laws, and judicial precedents in each jurisdiction under which 

they will be interpreted. This is well exemplified in Santa Monica Beach Property 

Owners Association, Inc., where the decision of the Florida District Court, holding 

that a short-term vacation rental was a permitted residential purpose, was based on 

an interpretation of the servitude favoring the free, unrestricted use of the property. 

Importantly, this standard is directly contrary to our own, which provides that “[a] 

servitude should be interpreted to give effect to the intention of the parties 

ascertained from the language used in the instrument . . . and to carry out the 

purpose for which it was created.” Restatement (Third) of Property (Servitudes) § 

4.1(1) (2000); Brandt, 2013 S.D. 22, ¶ 13, 827 N.W.2d at 875; see also supra ¶ 38. 

Other courts’ interpretations of differing covenants are not controlling here. 

Rather, the text of the Shirt Tail Gulch Covenants controls.

[¶42.] The majority opinion suggests that there must be some “meaning for 

the language ‘residential purposes’” supported by authority from other 

jurisdictions.5 See Majority Opinion ¶ 24. But by relying solely upon this approach, 

 

5. The North Dakota Supreme Court, in Hill v. Linder, had occasion to analyze 

a covenant containing the restriction that property be used for “residential 

(continued . . .)
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the majority opinion skips the important step of examining the Covenants’ plain 

meaning within its unique and specific context. The Covenants here place plain 

limitations on how the owners use their property. Bypassing this crucial step and 

relying on the myriad of decisions interpreting specific covenants from other 

jurisdictions is unhelpful to the analysis of the four corners of the Covenants at 

issue under our applicable law. If the Covenants here are truly unambiguous, as 

the majority opinion and both parties assert, then “the intent of the parties can be 

derived from within the four corners of the contract.” Gores v. Miller, 2016 S.D. 9, ¶ 

15, 875 N.W.2d 34, 39. Accordingly, we examine the use of the property by the 

owners, as set forth in the parties’ statements of undisputed material fact.

[¶43.] The Maynards live in Spearfish, South Dakota, and have never made 

Lot 24 of Shirt Tail Gulch their personal residence. They built this property for the 

specific purpose of using it for a vacation rental business. This is apparent from the 

terms of their construction loan for the project which required the Maynards to 

“maintain insurance against rent loss” and assign the rents to the financier in case 

of default. The property is owned by a corporate entity, Alpine Adventures. The 

________________________

(. . . continued)

purposes only.” 2009 N.D. 132, ¶ 13, 769 N.W.2d 427, 432. The court held 

that the phrase prohibited homeowners from operating a licensed day-care 

facility in their home because the day-care was not an incidental business 

use. In so concluding, the court reasoned “that the usual, ordinary and 

incidental use of property as a residence does not violate a covenant 

restricting use of the property to residential purposes only, but that an 

unusual and extraordinary use may constitute a violation, and that an 

incidental business use does not violate a covenant for residential purposes 

only as long as the business use is casual, infrequent or unobtrusive.” Id. If 

we were to apply a similar approach here, the record reveals the Maynards’ 

use of Lot 24 is a commercial business that is neither casual nor infrequent 

and certainly not incidental to a residential purpose.
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Maynards advertise the rental property on their own website as well as on thirdparty websites and have developed a limited “vetting process” to screen potential 

renters. Their projected gross revenue from the property is nearly $60,000 per year, 

with nightly rentals ranging from $500 per night to $1200 per night. The Maynards 

charge customers sales tax on the rentals. Lot 24 is advertised as being “[b]uilt 

with large groups in mind,” and “boast[ing]” five master suites.

[¶44.] The three-story house is rented out approximately 92-120 nights per 

year. During the summer months, the property is rented out nearly every day. To 

protect against loss occurring on the property, the Maynards carry commercial 

insurance for Lot 24 and the rental. Reviewing just this cursory enumeration of 

undisputed facts, it can hardly be said that the Maynards have anything other than 

a “commercial” venture. See The American Heritage College Dictionary 280 (3rd ed. 

1997) (defining commercial as “[e]ngaged in commerce” or “[h]aving profit as chief 

aim.”). Undoubtedly, the Maynards’ use of their property does not fit one of the 

permitted residential purposes.6

[¶45.] Further meaning and context of “residential purposes” can be derived 

from the Covenants’ inclusion of three specific uses of Lot 24 which have 

commercial characteristics. The Covenants identify these uses in the fourth 

declaration, to wit: “normal home occupations and offices of recognized professions 

and bed and breakfast uses allowed under State and County laws and regulations.” 

 

6. The Maynards’ commercial use of their property is in stark contrast to the 

Wilsons’ use of their neighboring property. The Wilsons bought their house 

in Shirt Tail Gulch in 2007, to use as their personal residence upon their 

retirement and spent nearly $1 million renovating and constructing additions 

to their home.
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The Maynards make no claim that they use the property as an office of a recognized 

profession. And as discussed below, the short-term vacation home rental activity 

occurring on Lot 24 does not fit within the other two permitted uses—normal home 

occupations or as a bed and breakfast— which the majority opinion concedes. See

Majority Opinion ¶ 27.

[¶46.] The circuit court held that the Shirt Tail Gulch Covenants’ phrase 

“normal home occupations” permits short-term vacation home rentals. To reach 

this conclusion, the court reasoned that “the drafters’ inclusion of [a bed and 

breakfast facility] is telling” because “[i]t demonstrates that the covenant was not 

designed to prohibit short-term rentals,” and “[i]t is inconsequential that vacation 

rentals are not expressly listed as a permissible use because they fall within the 

meaning of ‘normal home occupations.’” Further, the court reasoned that, although 

the term “vacation rental” is missing from the permitted commercial type uses 

expressly listed in the fourth declaration of the Covenants, the word “includes,” 

preceding the listed uses, should be interpreted to mean that the “examples 

enumerated in the text are intended to be illustrative, not exhaustive.”

[¶47.] The circuit court misinterpreted both the meaning of a normal home 

occupation and the significance of the inclusion of the bed and breakfast use in the 

Covenants. Bed and breakfast establishments are defined in SDCL 34-18-9.1(1)-(3) 

as:

(1) “Bed and breakfast establishment,” any building or buildings 

run by an operator which is used to provide accommodations for 

a charge to the public, with at most five rental units for up to an 

average of ten guests per night and in which family style meals 

are provided;
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(2) “Family style meal,” any meal ordered by persons staying at 

a bed and breakfast establishment which is served from common 

food service containers, as long as any food not consumed by 

those persons is not reused;

(3) “Operator,” the owner or the owner’s agent, who is required 

to reside in the bed and breakfast establishment or on contiguous 

property.

(Emphasis added.)

[¶48.] Here, the operators—the Maynards—allow more than ten guests per 

night, do not serve family style meals, and do not live in the home on Lot 24. The 

Maynards’ use of Lot 24 is far from being a bed and breakfast use as their 

commercial use meets none of the criteria. Although the circuit court concluded 

that the drafter’s inclusion of the bed and breakfast exception means that Lot 24

was allowed to be rented on a short-term basis other than as an actual bed and 

breakfast, there is only one “bed and breakfast” use as defined by South Dakota law. 

Importantly, SDCL 34-18-1(17) defines a “Vacation home establishment” which 

specifically excludes bed and breakfast enterprises as follows:

“Vacation home establishment,” any home, cabin, or similar 

building that is rented, leased, or furnished in its entirety to the 

public on a daily or weekly basis for more than fourteen days in 

a calendar year and is not occupied by an owner or manager 

during the time of rental. This term does not include a bed and 

breakfast establishment as defined in subdivision 34-18-9.1(1)[.]

(Emphasis added.) The circuit court ignored this statute when it held that 

“[v]acation rentals and bed and breakfasts are similar enterprises.” The canon of 

construction “expressio unius est exclusio alterius,” which is to say, “the expression 

of one thing is the exclusion of another” applies here. See Aman v. Edmunds Cent. 

Sch. Dist. No. 22-5, 494 N.W.2d 198, 200 (S.D. 1992). The fourth declaration in the 

Covenants permits bed and breakfast uses in accordance with state law. Vacation 
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home establishments are not included. The circuit court erred by conflating the two 

separately defined uses into one permitted use.

[¶49.] This leaves the question of whether the Maynards’ use of Lot 24 

constitutes a “normal home occupation.” The circuit court erred when it held that 

the Maynards’ use of the property constituted a normal home occupation because 

the renters are using Lot 24 as any homeowner would have used it. The court held 

that a renter’s use of Lot 24 mirrors a homeowner’s use because: “they sleep, cook, 

eat, drink, and gather there. This use has not destroyed the expected character of 

the Shirt Tail Gulch neighborhood[.]”

[¶50.] However, the circuit court cited no authority for the definition of a 

normal home occupation nor cited any authority holding that a vacation home 

rental business is a normal home occupation and instead crafted its own definition.

[¶51.] The majority opinion defines “home occupations” as being an 

occupation “‘customarily’ associated with residential dwellings” that may be 

“appropriate” to base out of a residence. See Agnew, 837 A.2d at 638. See also

Majority Opinion ¶ 27 n.2. Significantly, in every decision cited by the majority, 

defining or distinguishing a home occupation, the owner lived in the home.7 Here, 

 

7. See Agnew, 837 A.2d at 635 (owner lived in house where his roofing business 

was located); In re Salton, 983 N.Y.S.2d at 658 (owner lived in house where 

his animal exhibition business was located); Stevens, 324 P.3d at 478 (owner 

lived on same property where his operation of a commercial trucking business 

was located); Sanantonio v. Lustenberger, 901 N.Y.S.2d 109, 110 (N.Y. App. 

Div. 2010) (owner lived in same home where a professional hairdressing 

business was located); and Williams v. Lexington Cnty. Bd. of Zoning 

Appeals, 776 S.E.2d 749, 750 (S.C. Ct. App. 2015) (owner lived in a home with 

an adjacent dog grooming business on the property).
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the Maynards do not live and never have made their personal residence in the 

house on Lot 24.

[¶52.] The Maynards further attempt to blur the difference between how they 

are using Lot 24 and what a normal home occupation allows. They claim that their 

short-term vacation rentals are permitted because they are similar enough to a bed 

and breakfast commercial use and a normal home occupation. But a normal home 

occupation is far different from a bed and breakfast use.8 The two uses are listed 

separately in the Covenants, and if they were interpreted to mean the same thing, 

enumerating “normal home occupations” and “bed and breakfast” would be 

superfluous. Additionally, a vacation home rental is not a normal home occupation 

even if the renter’s use of Lot 24 could be conducted entirely within the structure. 

See Agnew, 837 A.2d at 638 n.11 (compiling cases where home businesses were 

found not to be “home occupations” despite the business being done entirely inside 

the home). As the majority opinion acknowledges,9 a short-term vacation rental 

business is different from a normal home occupation. The circuit court erred in its 

classification of the Maynards’ use of Lot 24 as such.

 

8. Courts have concluded that bed and breakfast commercial arrangements are 

not properly classified as normal home occupations. See Reynolds v. Zoning 

Hearing Bd. of Abington Twp., 578 A.2d 629, 631 (Pa. Commw. Ct. 1990) (“A 

Bed and Breakfast [was] not [c]learly incidental or secondary to the use of the 

dwelling for dwelling purposes and is therefore not a home occupation. It is 

more like a boarding house or a hotel . . . than a traditional undefined type of 

home occupation such as a craft shop, dressmaker or seamstress occupation.”

(citation omitted)). See also Town of Sullivans Island v. Byrum, 413 S.E.2d 

325, 328 (S.C. Ct. App. 1992) (holding “a Bed & Breakfast is not a home 

occupation.”).

9. See Majority Opinion ¶ 27 (“[T]he resolution of this case does not turn on 

whether Maynards’ use fits within any of these three uses.”).
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[¶53.] The majority opinion suggests that the “reading of this provision would 

prohibit a homeowner from leasing the home or allowing someone other than the 

owner to live in the Property.” See Majority Opinion ¶ 24. Obviously, the 

Covenants’ inclusion of the bed and breakfast use as “allowed under State and 

County law and regulations,” contradicts this claim because, under the statutory 

framework for a bed and breakfast use, the homeowner could lease out rooms so 

that others may live temporarily on the property. Furthermore, the majority 

opinion suggests that our conclusion would prohibit any profit-making motive the 

Maynards would have, such as long-term lease agreements. However, our focus 

must be on giving effect to the intent of the Covenants as clearly expressed in view 

of the surrounding circumstances. Under the majority opinion’s reading of the 

Covenants, very little stands in the way of the Maynards operating any type of 

lodging establishment10 on Lot 24 so long as the renters simply eat, sleep, and live 

on the premises on a short-term basis.

[¶54.] Although the Covenants do not define residential purposes, in each of 

the permitted commercial uses detailed in the Covenants, the owner must live in 

the home where the commercial activity occurs. This also evinces the intent of the 

Covenants to permit some types of commercial uses and not others. Short-term 

vacation rentals are not listed within the enumerated exception to “residential 

 

10. A “lodging establishment” is defined in SDCL 34-18-1(7) as “any building or 

other structure and property or premises kept, used, maintained, advertised 

or held out to the public to be a place where sleeping accommodations are 

furnished for pay to two or more transient guests. The term includes hotels, 

motels, cabins, bed and breakfast establishments, lodges, vacation home 

establishments, dude ranches, and resorts[.]”
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purposes,” and nothing in the Covenants reveals an intention to allow them. 

Without question, the Maynards’ commercial purpose for Lot 24 far exceeds the 

plain language of the Covenants. The majority opinion sidesteps this and, instead, 

relies on interpretations from other courts, interpreting unique covenants under 

their applicable jurisprudence, state laws, and ordinances.

[¶55.] The Maynards’ operation of a short-term vacation rental on Lot 24 

fundamentally alters the residential nature of the Shirt Tail Gulch subdivision and 

violates the restrictive covenants protecting it. I would reverse and remand with 

instructions to enjoin the Maynards from operating a vacation home rental 

business.

[¶56.] DEVANEY, Justice, joins this writing.