Tennessee HOA back in court over Airbnb decision, voting fraud allegation on Lone Mountain

When a Claiborne County judge ruled in March the covenants of a Norris Lake neighborhood were too ambiguous for its homeowners association to ban short-term vacation rentals like Airbnb, it seemed like a years-long dispute might end.

But in Lone Mountain Shores, the divide between neighbors who want the rentals and those who don't is set to continue as the HOA board appeals the court ruling and as homeowners accuse the board of trying to eliminate rentals with a fraudulent vote.

Conflicts over vacation rentals have popped up all over the world, and some governments have taken decisive action to curb what they see as a key root of housing shortages. But housing shortages are not the issue on Lone Mountain, home to around 165 houses along steep, winding roads with stunning views of the lake.

Rather, each side feels banning or allowing short-term rentals fundamentally changes the personality of the neighborhood.

"Our biggest concern is that people are going to come in here, buy lots, put tiny homes and things like that on them just for the purpose of renting," said David Izbrand, president of the HOA. "This is a residential community. I live here full-time. A lot of people do."

Several residents have non-permanent addresses on the mountain, renting out short-term to help pay a second or third mortgage. They argue − and the court agreed − a neighborhood rule limiting homes to "single family residential purposes" can include renters who use the properties like a home .

The HOA filed a notice of intent to appeal the decision in April, a little more than a month after the ruling sided with pro-renters. In a separate rental case, the Tennessee Supreme Court held in 2023 that "residential" could be interpreted many ways and is not clear enough to ban listings on sites like Airbnb or Vrbo.

The board's former president had pledged not to use community funds to appeal the ruling and resigned shortly after other board members supported the push in a 3-2 vote. Izbrand, the appointed successor, said the appeal is just another way to try to resolve the dispute.

"The community is fairly well split on whether there should be short-term renting here or not. And it's not just a local issue. It's an international issue," Izbrand said. "It's obvious that short-term renting can cause issues or our people would not be doing this."

Court rules HOA board must halt attempt to limit rentals

The board gathered anti-renters and pro-renters together to determine a ballot measure that could make the neighborhood rules less ambiguous.

Izbrand brought together a panel but, like others in the past, it could not decide on a percentage of lots to be rented short-term. So, the board moved ahead with its own ballot, which would have grandfathered in homeowners currently renting while banning all short-term vacation rentals after those properties were sold.

This way, Izbrand said, current renters could still make good on their investment and the community could move beyond its differences.

Not so fast. On June 26, Chancellor Elizabeth Asbury granted a temporary injunction that halted the vote after she reviewed allegations that the HOA let homeowners cast more votes than the community's bylaws allowed.

"I don't believe the grandfather clause that the board proposed is legitimate in any way," Ryan Sarr, attorney for the pro-rental homeowners, told Knox News.

In November 2022, after the board sued more than two dozen homeowners who rented their properties short-term, several stopped renting. Because they would not be able to provide receipts for their rental over the past year, they would not be grandfathered in, Sarr said.

"We're in a temporary hold on any sort of action by the board related to this amendment until the judge can get to the merits of whether or not the covenant amendment ballot itself was legal," Sarr said.

Sarr and his clients contend several homeowners were allowed to cast more votes than is legal under the neighborhood bylaws. While homeowners get one vote per lot – and only one vote for lots they combine for tax purposes – Izbrand said the bylaws allow each homeowner one vote per lot for which they paid HOA fees.

The rental ballot will have to wait until after an Aug. 26 hearing at the earliest, when the judge could grant the HOA's request for arbitration or extend the freeze on the vote.

Conflict over ballots is not new in Lone Mountain Shores, as pro-renters continue to push for the release of votes in a razor-thin HOA election last fall. Pro-renters also are asking the court to consider reviewing those results and appointing Fred Maess, who lost the race for president by a handful of votes.

If HOA board elections are an indication, then Lone Mountain Shores is split almost evenly between pro-renters and anti-renters. One way the conflict could end, Maess said, is a legal voting process to enact rental limitations based on the input of neighbors.

"If they were fair, and it was a ballot that was produced by the community, I think, you know, we wouldn't like it, but we would have to accept it," Maess said. "You know, that's part of doing this in a community with covenants and restrictions."

Kevin Stevens, attorney for the HOA board, did not respond to request for comment.

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

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This article originally appeared on Knoxville News Sentinel: Tennessee HOA back in court over Airbnb decision, voting fraud allegation on Lone Mountain