A Tennessee town is split over Airbnb legal fight. 5 things to know and what's next

A legal fight on a mountaintop in Tennessee has divided neighbors over the question of whether vacation rentals like Airbnb should be allowed in their residential community.

In some ways, the story of Lone Mountain Shores in New Tazewell is familiar to anyone who has ever gone to bat against an HOA or been disturbed by rowdy tourists staying at a rental house next door.

The divide in the neighborhood, a covenant-restricted development established on Norris Lake in 1998, runs deep. Residents know where their neighbors stand, thanks in part to yard signs that declare vacationers are either welcome or unwelcome. Pro-renters and anti-renters don't associate with each other.

The anti-renter HOA board, led by President Mark Jonckheere, initiated a lawsuit against around two dozen homeowners last fall and defendants sued the board back. Some took it a step further, suing the board members personally on allegations of conspiracy.

Here are 5 things to know about the curious case of Lone Mountain Shores, and where the conflict could be headed.

Go in-depth: Airbnb dispute in Tennessee mountain town turns nasty as neighbors head to court

Residents disagree on what renters mean for community

Anti-renters say vacationers have abused their private property, left trash in the neighborhood, thrown loud parties, smoked marijuana and knocked on their doors at night. They say the homeowners who rent their homes are profiting off the backs of full-time residents.

Pro-renters have their own stories to tell, about the nice families who have visited the area for years and the "self-policed" behavior of tourists. If renters misbehave, they say, they won't be allowed back. They also claim the rentals are not a business venture for most homeowners, who rent seasonally to help with the mortgage and upkeep.

Roughly 85% of property owners in Lone Mountain Shores are part-time residents. Not all full-time residents oppose vacation rentals and not all part-time residents support them.

Previous HOA boards allowed short-term rentals

The Lone Mountain Shores Owners Association has a board of five officials, elected every two years, who oversee the annual neighborhood budget of around $200,000. The current board is using a sizable portion of that budget, drawn from membership dues, to sue a small group of homeowners.

The legal challenge is based on the neighborhood's covenants, which limit property use to single-family residences, but do not forbid vacation rentals explicitly. The lawsuit sets this board apart from all previous boards, which did not raise a legal challenge to rentals and, in some cases, affirmed their presence.

In November 2022, the HOA board filed a complaint for a permanent injunction against 28 defendants who allegedly rented their properties to vacationers. Those defendants countersued to try to prevent the board from going back on the judgments of previous boards.

The law is broadly favorable to HOA authority

Jonckheere, the current HOA board president, said "the law is clear and on our side in this matter." But is that true? The answer is that state law generally supports HOAs in fights with residents.

HOAs can have stricter restrictions than the state, and a 2018 Tennessee Short-Term Rental Unit Act gives them the authority to limit or ban short-term rentals in their jurisdiction and according to their covenants. The legal fight will likely come down to a few sections of the covenants.

A case currently before the Tennessee Supreme Court could revise the state's legal understanding of single-family residences to include short-term rental homes that are occupied by their owners.

HOA board narrowly survived partisan recall vote

In the middle of the court battle, a group of pro-renters initiated a recall vote for all HOA board members. On July 31, a third party accounting firm that processed the ballots announced all five members had retained their seats, and that eight ballots were deemed ineligible by the board.

Though the board says the ballots were ineligible because of unpaid dues, they have not released the list of ineligible members, raising doubts among pro-renters that the vote was fair. Four of the five members held onto their seats by an eight-vote margin or slimmer.

What's next? Legal battle could draw out for years

A group of pro-renters sued board members personally, claiming $600,000 in damages on allegations that the board defrauded members out of rental profits and diminished property values in their fight to rid the neighborhood of commercial activity.

Though the current board is up for re-election in October and will undoubtedly face a challenge from pro-renters, the fight will end in court. Jonckheere said the court proceedings had stalled, perhaps awaiting a ruling from the Tennessee Supreme Court.

Some pro-renters say they'll appeal the court's decision if it rules in favor of the board in either case, dragging the court proceedings far beyond where the board imagined they would go.

Daniel Dassow is a reporting intern focusing on trending and business news. Phone 423-637-0878. Email daniel.dassow@knoxnews.com.

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This article originally appeared on Knoxville News Sentinel: How Tennessee neighbors battle over Airbnb rentals could resolve