Why a 2012 court case could shape the future of short-term rentals in WNC after Hurricane Helene
"Hunting Country!" fends off short-term rentals for now from property owner, but questions remain
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A North Carolina Court of Appeals decision from 2012 is once again a key legal precedent as towns in the foothills — including hard-hit communities in Polk and Rutherford counties — weigh the future of short-term vacation rentals in the wake of Hurricane Helene. The key issue? Polk County Commissioners appear to have ignored case law on the books for 13 years.
The case, Russell v. Donaldson, clarified that restrictive covenants banning "business or commercial use" of residential property do not prohibit homeowners from offering short-term rentals, such as Airbnb and VRBO. The decision is now at the center of renewed debate in 2025 as local governments struggle to balance tourism recovery with neighborhood preservation.
Why This Matters Now
After Hurricane Helene devastated parts of western North Carolina in Sept. 2024, communities like Tryon and Saluda (and nearby Lake Lure and Chimney Rock in Rutherford County) have seen an influx of displaced residents, contractors, and tourists booking short-term accommodations. At the same time, many full-time residents have raised concerns about neighborhood disruption, rising rental prices, and what they see as unregulated commercial activity in areas zoned for single-family housing.
On June 16, Polk County commissioners denied a text amendment to a zoning ordinance that would have allowed short-term rentals in Hunting Country, an area east of Tryon. Carl Shawn Keller, the petitioner, mentioned the 2012 court case at the public meeting. The county’s attorney said (on video) that she wasn’t aware of it.
He started the process with a permit dated March 3, then it was then taken up by the planning board. When they denied it, it was brought to the county commissioners. Keller’s property is on the SC state line. It is unclear if he will proceed with further legal steps. He recently retired from the army and wanted to rent out his guest house, he said. Keller exclusively told Cops & Congress that he spoke with four different law enforcement agencies: Polk County Sheriff’s Office, Tryon Police Department, Saluda Police Department and Columbus Police Department, to educate himself about any issues with short-term vacation rentals. He was told there were none. But that wasn’t what the the Hunting Country president told commissioners at the meeting.
Following Hurricane Helene, emergency rental needs collided with local zoning limits. A wave of new vacation rental listings in storm-damaged areas raised questions about who is profiting from the rebuild — and whether locals are being priced out. In Chimney Rock, the mayor has a personal business interest in pushing short-term vacation rental permits forward as the town rebuilds.
The Russell case offers important context. In 2012, the North Carolina Court of Appeals ruled that the phrase “no business or commercial purposes” in a neighborhood covenant was too vague to bar short-term rentals. The court emphasized that state law favors the free use of private land unless clear and specific restrictions exist. In other words, unless the language explicitly bans short-term rentals, courts are likely to uphold a property owner’s right to rent out their home.
“Ambiguities in restrictive covenants will be resolved in favor of the unrestrained use of land,” the court stated, echoing a long-standing principle in North Carolina property law.
Local Leaders Caught in the Middle
For town planners and code enforcement officers in places like Rutherfordton, Columbus, and Mill Spring, this means a limited ability to curb short-term rentals unless specific ordinances are passed — and those ordinances must avoid conflicting with broader state protections.
“This issue came to a head after Helene,” said a local planning official who spoke on background to Cops & Congress recently. “We had homes being rented out days after floodwaters receded. It’s helped tourism bounce back, but it’s made it harder for some families to find long-term housing nearby.”
Meanwhile, rental platforms and property rights advocates argue that short-term rentals provide vital income for homeowners still recovering from the storm and allow communities to absorb surges in construction and hospitality demand.
Keller said he was open to renting his guest house for the weekend or longer. Hunting Country is a complex neighborhood.
What State and Federal Records Show
The NC Secretary of State records show “Hunting Country!” is a 501(c)(4), created in 2001, not a 501(c)(3), as its president, Phil Burrus, publicly said at the meeting. There’s also a 501(c)(3) “Hunting Country Trails Homeowners Association, Inc.,” formed in 1984 and a 501(c)(3) “The Hunting Country Property Owners Association, Inc.,” formed in 1984, which lost its tax-exempt staus from 2010-2017, according to federal records reviewed by Cops & Congress.
Keller said he is not required to join the homeowners association and shouldn’t be subject to their rules. Burrus wrote in his message on their website, “This HCA is so important and vital to our area that I hope when I retire, others will come forward and keep it going. We have a strong Board along with a Defense Fund and two qualified attornies (sic). It is vital for the security and peace and beauty of our area. This is YOUR Association....we are all volunteers as its a non-profit.”
The rules for 501(c)3 and 501(c)4 nonprofit organizations are defined by the Internal Revenue Service. Affiliated organizations enjoy many advantages, according to industry experts. “There are issues an affiliated organization needs to watch for. Above all, the 501(c)(3) and 501(c)(4) must be separate legal entities and the 501(c)(3) must be able to demonstrate that it is not subsidizing, directly or indirectly, the partisan electoral work of the affiliated 501(c)(4),” according to the Alliance for Justice.
Statewide Attention Grows
The Russell v. Donaldson ruling is also influencing statewide policy. A new bill in the North Carolina General Assembly was proposed in March to set baseline rules for short-term rentals, possibly overriding patchwork local restrictions. But until that law is passed, Russell remains the legal anchor for any dispute involving neighborhood covenants and vacation homes.
For now, in counties still reeling from Helene's aftermath, the ruling protects homeowners trying to rebuild — and raises pressing questions about what kind of communities these mountain towns want to be.
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Annie Dance is the publisher of Cops & Congress, a newsletter that tells the truth about what happens when disaster, democracy, and small-town policies collide.
Please stay on top of this at least in Raleigh about this....If you can. Many of us would appreciate it.
I am a firm believer that you cannot operate a business on property that is zoned residential. The STR uses local resources at residential rates and not commercial rates. STR rentals only have to have residential insurance. I wonder if an insurance carrier found out the house they cover is residential. The house burns down. Would that insurance carrier cover that house? If my house went with it would STR insurance carrier my house? I could go on and on about this. One thing is for sure. Small town communities are disappearing quickly. How do we co-exist?