Table of Contents Links below

Opinion Letter

Opinion letter from BECKER, FLEISHMAN, BROWN & KNIGHT, P.C. indicating that short-term rentals are allowed in Lone Mountain Shores BECAUSE of the ambiguity of Covenants. Tennessee favors property rights. This attorney opinion letter was posted on the lmsoa.org website until sometime in 2022 when it was removed.

Short-Term Rental Reimbursements

In September, 2006, the Board approved reimbursing owners traveling and lodging expenses when they served as a board member. This included stays at Turtle Tom’s cabin, a rental home in Lone Mountain Shores.

www.lmsoa.org >>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2006>>Boad_Decisions_Between_Meetings_2006

Owner Question

At the October 2, 2006 Annual Meeting, an owner asked the Board “Do you have to live in a house before you can make it available to rent? Is it considered “commercial use” to build a house for the specific purpose of renting? 

Response: Former attorney judgment—OK to rent. 

www.lmsoa.org>>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2006>>October_7_2006_Annual_Meeting_Minutes

Covenant Change

Major changes were made to the Covenants in 2013. The change made in 2013 germane to rentals was the definition of Single Family Residential Purposes.

Article II, Section 2.15 – “Single Family Residential Purposes” shall mean the property, consisting of just one primary Dwelling and all ancillary buildings on it shall be occupied by just one legitimate single housekeeping unit as distinguished from unaffiliated individuals or groups occupying a motel, hotel, bed & breakfast, or boardinghouse. Additionally, allowances are made for one accessory living quarters, such as a mother-in-law suite, without violating the “single family residential use” provided this secondary living quarters meets the requirements of Section 6.05 of these Covenants. Any rental accommodations and services such as those provided by hotels, motels, bed & breakfasts, rooming or boarding houses, apartment buildings or condominiums are excluded by this definition.

Ambiguity

The definition of Single Family Residential Purposes is being used as the basis for claiming short-term rentals are not permitted within Lone Mountain Shores. However, there is ambiguity in the Covenants as “rentals” are specifically mentioned in the following sections:

In Section 6.04, the Covenants state “This restriction is not to be construed to prevent rental of any Lot or any dwelling for private single-family residential purposes…”

Section 6.05 states “Accessory living quarters cannot be rented independently of the primary living quarters or used to house anyone unaffiliated with the rental group (including owners of the property, members of their family or their invited guests) during the rental of the primary living quarter.” This section implies rental of the primary living quarters is permitted.

Section 6.07 titled “Rental” states “Lots and Dwellings may be rented only for private single-family residential purposes subject to the following provisions:

• The renting to unaffiliated individuals or groups at the same time is prohibited;
• Tenants are required to abide by all LMS Governing Documents
• Owners are responsible for the actions of their tenants. Each Owner shall take appropriate steps and should put in place additional rules, limitations, and restrictions as necessary to ensure that tenants do not conduct deleterious activities or otherwise create a nuisance to other Owners.

Complaints

At a July 6 open forum, several homeowners complained that LMSOA should discontinue the practice of allowing home rentals. After discussion, single family rentals are allowed in the Covenants, so Board will take no action at this time. 

www.lmsoa.org>>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2020>>Board Meeting Minutes 070620

At the August, 2020 Board meeting, several complaints were expressed regarding rental issues such as gun target practice and fireworks. Concerned owners were advised to report complaints to the Claiborne County Sheriff’s office. A request was made to initiate a committee to research the rental concept for LMS.

www.lmsoa.org>>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2020>>Board Meeting Minutes 080320

Rental Committee Established

Following the August Board meeting, a Rental Committee, lead by Sue Woodson, was authorized by the Board. The Committee consisted of non-renters, renters and owners neutral on the topic of rentals. The stated goal of the Committee was to review the current policy on rentals within LMS to see if they are pertinent to today’s environment and address any current renter-related issues on the mountain. The first meeting was held on August 13.

Rental Committee Activities

Unproductive Discussion - The second Rental Committee meeting was held September 3 at which time there was an unproductive and unsubstantiated discussion of the issues/problems associated with rentals.

Another Deerfield - The third Rental Committee meeting was held September 17. Committee members agreed the previous focus on issues/problems associated with renters had gotten the Committee off track. The entire Committee agreed the real problem is not wanting Lone Mountain Shores to become another “Deerfield”.  When the Board was updated on September 28, the Rental Committee chair reported all agreed the objective is to keep LMS a residential neighborhood and not become a commercial neighborhood. 

www.lmsoa.org>>Owners>>>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2020>>Board Meeting Minutes 092820

Miles Apart - The fourth Rental Committee meeting was held October 8. The “renters” and “non-renters" made proposals for how to handle rentals which were at opposite ends of the spectrum. All agreed further discussion was needed on the possible impact of corporate investors.

Annual Meeting Update - At the October 17, 2020 Annual Meeting, the Rental Committee chair reported the primary goal of the committee is to keep Lone Mountain as a residential community and avoid becoming a commercial community. Discussion followed with some homeowners stating they could not afford to build their home here without the opportunity to rent. 

www.lmsoa.org>>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2020>>Annual Meeting Minutes 101720

Course Change - On October 26, the Rental Committee chair proposed the Committee change course and concentrate on how to prevent corporate rentals within LMS. Committee members agreed.

Percentage of Rentals - At the November 2 Board meeting, the Board president stated that an HOA management company recently gave a presentation to the Board and stated the percentage of rentals allowed in a community should not exceed 30%. The current number of rentals within LMS is believed to be around 15%.

www.lmsoa.org>>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2020>>Board Meeting Minutes 11022020

Options - Following the fifth Rental Committee meeting on November 12, ten options were developed attempting to prevent corporate rentals. At the December 1 Board Meeting, the Rental Committee was asked to whittle down the options to three the committee could agree upon.

www.lmsoa.org>>Owners>>Documents>>Board Minutes from Meetings>>Minutes from Meetings 2020>>Board Meeting Minutes 12012020

No Consensus - The sixth Rental Committee meeting held December 6 centered on individual committee members voting on the 10 options. There was no consensus among the group although the option garnering the most votes was to cap the number of rentals allowed within LMS.

Owner Vote Ignored

A special meeting is held January 22 to discuss the proposed Rental Registration Bylaw change. At the meeting, certain owners petition the board to not implement the Rental Registration Bylaw change.  Note: A special meeting can be requested by 10% of owners by means of a signed petition.  

www.lmsoa.org>>Owners>>Documents>> Board Minutes from Meetings>>Minutes from Meetings 2022>>Special Meeting 01222022

In February, a certified letter is sent to the Board by concerned owners asking why the Rental Registration Bylaw change approved by owners had not been implemented. You may ask why we want to implement bylaw changes placing restrictions on short-term rentals. A significant concern is the board’s apparent belief they can ignore an owner majority vote by not amending the bylaws as voted on by the owners. This is a dangerous precedent to set. Below is a portion of the Board’s response to our letter. 

“The decision to amend the Bylaws is a unilateral decision that the Board can make as the Board deems appropriate. At this time the Board does not believe that it is appropriate to amend the bylaws to create new restrictions upon the use of the property of individual owners. The proper procedure to add new restrictions is to amend the covenants by written ballot.” 

The Board announces their decision to not implement the Rental Registration Bylaw at the March Board meeting. Based on the Board’s reasoning for not implementing the Bylaw change, the Board is asked to place the issue on the ballot for an owner vote. The Board refuses. 

A group of owners seek and obtain the opinion of an attorney concerning the Rental Registration Bylaw. In a nutshell, the attorney agrees with our position that the Board is obligated to adopt the Rental Registration Bylaw. The attorney’s opinion is shared with the Board at the July 18 Board meeting. No response is ever received from the Board concerning this legal opinion. 

Contentious Meetings

The Board’s refusal to implement the Rental Registration Bylaw change passed by members, coupled with rumors circulating that real estate agents are being told there will be no more rentals in LMS, the owners supporting rentals became alarmed. At the February, March and April Board meetings, members repeatedly ask the Board for clarification concerning their intentions related to short-term rentals; and ask for discussion to resolve the issue. The meetings became very contentious when the Board refuses to provide what members consider to be straight forward answers. On April 12, the Board sends an email to all owners indicating legal counsel has been retained on the issue of rentals; and the topic of rentals will not be discussed at future Board meetings.

Cease and Desist

On July 18, the Board sends an email to owners linking to a legal opinion letter stating “short-term, vacation-style rentals are specifically prohibited by the Covenants.” 

On August 8, cease and Desist Letters are emailed to several Lone Mountain Shores owners ().  A Special Meeting is scheduled for September 14 at 10:00 a.m. to discuss short-term rentals. Please note the weekday (Wednesday) and time for this meeting. Approximately 85% of owners are non-residents. Could this meeting have been scheduled for a more inconvenient time for non-resident owners?

At the September 14 Special Meeting, the Board is asked several times to resolve the short-term rental question by placing the issue on the ballot for an owner vote, rather than spend thousands of dollars in legal fees. The Board refuses.  

Compromise Offered

After the Special Meeting, the renters proposed a compromise (Rental Owner Compromise to Board) to the Board. The Board rejects the compromise with no explanation or discussion.

Election Process Changed

The Board engages a CPA firm to count ballots for the fall election.  On the surface, this appears to be a positive move, however, it results in less transparency.  The board secretary creates her own list of owners which contains documented errors, no witnesses are permitted during the ballot counting process as was the practice in previous elections, and the board refuses to release the instructions given to the CPA firm for ballot counting.

Lawsuit

In early November, the Board files a Complaint for Permanent Injunction (Complaint for Permanent Injunction) against 19 owners. Subsequently, a Motion for Dismissal (Motion for DIsmissal) is filed by the owners’ attorney. On March 2, 2023 the court denies the owners' Motion to Dismiss.

January – March 2024 – Records Request (Fall 2023 Ballots) 

Mr. Frantz files suit against the LMSOA Board to obtain the requested redacted ballots from the Fall 2023 election. On March 26, the Court rules in Mr. Frantz’s favor. 

March 4, 2024

Chancellor Asbury rules in favor of the defendants (owners) in the short-term rental lawsuit filed by the Board of Directors of Lone Mountain Shores in November 2022. The Board’s Motion for Summary Judgment is DENIED. In her ruling, the judge states the Covenants/Restrictions do allow rentals (paragraph #33); and based on the undisputed facts, one could reasonably conclude that Sections 2.14 and 6.04 were drafted in a way so as to allow short term rentals of an entire house…(paragraph #28).

The Board stated multiple times that the purpose of the lawsuit was to clarify the Covenants as written and numerous pledges were made to abide by the judge’s ruling. For example, in a February 27, 2023 letter to the community, the Board wrote, We chose to get more than a legal opinion; we desired to have a legal judgment/ruling of the existing covenants as written in regards to short-term rentals so that the community would not have to experience this disagreement again. We pledge to honor and abet any final judicial ruling in regards to the interpretation of the covenants as part of our duty of care.

March 2024- STR Appeal and Board Resignations

On March 19, the Board votes 3-2 in an open session NOT to appeal the judge’s March 4 ruling concerning STRs. Those voting not to appeal are Claudio Biltoc, President, Stacy McElhiney, Treasurer, and Sabrina Izbrand, Secretary. Voting to appeal are Pat Armstrong, ARC Liaison, and Don Nave, Vice President. Before voting, Don Nave asks to table the vote because he said he had not been informed the vote would take place at the meeting.

On March 24, the Board votes in a closed session TO APPEAL the judge’s March 4 ruling. Sabrina Izbrand changes her vote to “yes.” Please note, the community is not informed of this vote until April 17. The following day on March 25, both Claudio Biltoc, President, and Sabrina Izbrand, Secretary, resign from the Board.

On March 30, David Izbrand informs the LMSOA Community he has been appointed President of the Board to replace Claudio Biltoc, and Gene Chalfin has been appointed Secretary to replace Sabrina Izbrand. There is no community vote or input concerning the replacements.

April / May 2024 – STR Compromise Discussions 

On April 17, David Izbrand, Board President, informs the LMSOA Community of the Board’s decision TO APPEAL the judge’s March 4 ruling on short-term rentals. In his letter, David states “this appeal will terminate if we as a community can find a solution to the short-term renting issue among ourselves that results in a covenant change.” 

On April 20 and 27, meetings take place between representatives from the Board and pro-renters to discuss a compromise. Click the links in the previous sentence to review the initial proposal from each side.  The Board is represented by David Izbrand, President; Stacy McElhiney, Treasurer; and John DeMass, owner. The pro-property rights representatives are Fred Maess, Michelle Lund and Billy Belt.

On May 3, the pro-rental group sends a brief short-term rental survey to all owners. The purpose of the survey is to obtain specific data to assist in the compromise discussions, particularly the idea of a rental cap. The results of the survey indicate 82% of owners support short-term rentals; and the survey does not show a great deal of support for stringent limits on the number of short-term rentals permitted in LMS. To view the full results of the survey, as well as the survey comments,  click the links in this sentence.  

On May 18, the results of the STR survey are shared with the Board representatives at the third compromise meeting.  The Board representatives express concern about the entire Board being able to agree on a rental cap in the range supported by most owners (>20%).  

At some point after the May 18 meeting, David Izbrand, Board President, unilaterally calls off the compromise discussions. The pro-rental representatives are not consulted or informed beforehand. The representatives learn of the decision when it is discovered the Board plans to send an STR covenant change to owners for a vote.

May / June 2024 – Records Request (Fall 2023 Ballots)

Branden Frantz discovers voting irregularities in his examination of the redacted ballots from the Fall 2023 election. These irregularities call into question the accuracy of the reported results for the Fall 2023 election. A request to examine the unredacted ballots is denied by the Board. Mr. Frantz and several other owners file suit against the Board to obtain the unredacted ballots from the Fall 2023 election. The document linked in the previous sentence details the voting irregularities identified by Mr. Frantz. 

The Board argues for arbitration on the issue of releasing unredacted ballots and a hearing is set for August 22, 2024. The Board requests a postponement to inquire whether D&O insurance covers the lawsuit. The judge grants the Board’s request and the hearing is rescheduled for September 16, 2024.  At the September 16 hearing, the judge grants the Association’s motion to require arbitration to resolve the issue of the unredacted ballots for the Fall 2023 election. See 2025 subheading “Arbitration” for additional information on the arbitration events.

June 2024 – STR Covenant Vote / Criminal Contempt Motion

The Board mails a covenant vote to owners concerning STRs. Click here to see the proposed covenant amendment placed before owners.  

Owners file suit seeking a temporary injunction to stop the STR covenant vote until the voting irregularities identified in the Fall 2023 election are resolved; and the validity of the covenant ballot itself is resolved. The Court grants the temporary injunction on June 26 placing the STR covenant vote on hold until the Records Request for the Fall 2023 Ballots is resolved. 

The judge’s ruling on September 16 (see May / June – Records Request above) to grant the Association’s request to require arbitration to resolve the issue of the unredacted ballots for the Fall 2023 election, effectively moves the STR Covenant vote to arbitration as well. See 2025 subheading “Arbitration” for additional information on the arbitration events.

At the September 16 hearing, the judge also orders that the June 2024 STR covenant ballots are to be transferred to the Claiborne County Clerk & Master office. The order is filed October 30, 2024. The Board does not transfer the ballots until March 31, 2025. This delay results in a Criminal Contempt Motion being filed against the Association on April 23, 2025. A hearing on the Criminal Contempt Motion is held on June 9, 2025. On August 5, the judge denied the criminal contempt motion. The judge stated civil contempt would be more appropriate and by eventually delivering the ballots to the court, the Association purged themselves of contempt. 

August 2024 – Fall Election

On October 3, 2025, Debra Jonckheere et al files a motion to postpone the fall Board election until all lawsuits are settled including the STR case with the TN Court of Appeals. The Appeal of the STR case is expected to take 8-12 months which means Ms. Jonckheere is asking the court to postpone Board elections for 8-12 months at a minimum. The judge grants a temporary restraining order halting the Fall Election until a hearing on October 18. 

A hearing is held October 18 concerning the temporary restraining order. On November 1, 2024, the judge rules that the ballot tabulation for the Fall Election is to proceed. The results of the Fall Election are announced on November 5. The two candidates opposing Board practices of the last 3 years – Deb Hays and Matt Gerety - are elected by a 60-40 margin.