Richard Forshee, Jean Forshee, Judith Timmerman, Verlan E. Edwards, Mary L. Edwards on behalf of Verlan & Mary Edwards LLP, Robert R. Olson and Janet A. Olson, Plaintiffs-Respondents,
Lee Neuschwander and Mary Jo Neuschwander, Defendants-Appellants.
from an order of the circuit court for Sawyer County No.
2016CV4: JOHN M. YACKEL, Judge. Reversed and cause remanded
Stark, P.J., Hruz and Seidl, JJ.
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
The following background facts are undisputed. The
Neuschwanders own a single-family waterfront residence in
Hayward located on Sorenson Drive, a private, dead-end road.
Each of the Neighbors also owns property on Sorenson Drive,
either adjacent to or near the Neuschwanders' property.
Both the Neuschwanders' property and the Neighbors'
properties are subject to the following restrictive
covenants: 1. No dwelling can be erected on said property
with a living space of less than 1, 000 square feet. 2. There
shall be no subdivision of the existing lots. 3. There shall
be no commercial activity allowed on any of said lots.
The Neuschwanders began renting out their property on a
short-term basis in 2014. They advertised the property both
in printed media and online as "Lake Point Lodge."
A listing for the property on the vacation rental website
vrbo.com specified it was available for minimum stays of two
to seven nights, for a maximum of fifteen overnight guests.
During the year 2015, the Neuschwanders rented their property
to over 170 people. They received $55, 784.93 in rent,
including taxes, and they paid the City of Hayward $4, 973.81
in room tax.
In January 2016, the Neighbors filed the instant lawsuit,
alleging short-term rentals of the Neuschwanders'
property violated the restrictive covenant prohibiting
"commercial activity" on the Neuschwanders'
lot. The Neighbors sought an injunction prohibiting the
Neuschwanders "from using [their] property as a vacation
rental." In their answer, the Neuschwanders admitted
renting out their property on a short-term basis; however,
they denied that such rentals violated the restrictive
covenant prohibiting "commercial activity" on their
Both sides ultimately moved for summary judgment. In its
written decision, the circuit court observed the term
"commercial" is commonly defined as "viewed
with regard to profit." The court concluded the
Neuschwanders had "clearly" profited from the
short-term rentals of their property. The court also relied
on the affidavit of James Correll, one of the individuals
involved with the creation of the parties' subdivision,
for the proposition that the "purpose of the restrictive
covenant was to ensure and maintain a quiet neighborhood
where people would know their neighbors." The court
reasoned the short-term nature of the Neuschwanders'
rentals "and the high volume of different people staying
in the neighborhood" violated that purpose. The court
therefore concluded the restrictive covenant prohibited the
Accordingly, the circuit court issued an order granting
summary judgment to the Neighbors and denying the
Neuschwanders' summary judgment motion. The court
enjoined the Neuschwanders from renting their property on a
short-term basis, except during the weekend of the American
Birkebeiner cross country ski race. The Neuschwanders now
We independently review a grant of summary judgment, using
the same methodology as the circuit court. Pertzsch v.
Upper Oconomowoc Lake Ass'n, 2001 WI.App. 232,
¶7, 248 Wis.2d 219, 635 N.W.2d 829. Summary judgment is
appropriate if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law.
Wis.Stat. § 802.08(2) (2015-16). Here, the circuit court
determined the Neighbors were entitled to summary judgment
because the restrictive covenant prohibited the Neuschwanders
from renting out their property on a short-term basis. The
interpretation of a restrictive covenant is a question of
law. Pertzsch, 248 Wis.2d 219, ¶7.
Wisconsin's public policy favors the free and
unrestricted use of property. Crowley v. Knapp, 94
Wis.2d 421, 434, 288 N.W.2d 815 (1980). "Accordingly,
restrictions contained in deeds … must be strictly
construed to favor unencumbered and free use of
property." Id. In order to be enforceable, deed
restrictions must therefore be expressed "in clear,
unambiguous, and peremptory terms." Id. at 435.
When the meaning of language in a restrictive covenant is
doubtful, all doubt should be ...