Restrictive Covenant Violation

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WI Court of Appeals – District III

Case Name: Richard Forshee et al v. Lee Neuschwander, et al

Case No.: 2016AP1608

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Restrictive Covenant Violation

Lee and Mary Jo Neuschwander appeal an order denying their summary judgment motion and instead granting summary judgment in favor of their neighbors, Richard and Jean Forshee, Judith Timmerman, Verlan Edwards, Mary Edwards on behalf of Verlan & Mary Edwards LLP, and Robert and Janet Olson (collectively, the Neighbors). The Neighbors argued that, by renting their property to others on a short-term basis, the Neuschwanders violated a restrictive covenant prohibiting “commercial activity” on the Neuschwanders’ lot. The circuit court agreed that short-term rentals violated the restrictive covenant. At the Neighbors’ request, the court issued an injunction prohibiting the Neuschwanders from renting their property on a short-term basis, except during the weekend of the American Birkebeiner cross country ski race. We conclude the restrictive covenant is ambiguous as to whether short-term rentals of the Neuschwanders’ property are prohibited. Because restrictive covenants must be clear and unambiguous in order to be enforced, the circuit court erred by concluding the Neuschwanders’ short-term rentals violated the restrictive covenant. We therefore reverse the order granting summary judgment to the Neighbors and enjoining the Neuschwanders from renting their property on a short-term basis. We remand with directions that the circuit court enter summary judgment in favor of the Neuschwanders

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.