Is Running an HOA Home Business Allowed? | Clark Simson Miller

Summary

Every homeowners association is different, but most will run into the same basic problems. One such problem has to do with running an HOA home business. More specifically, should the association allow it?

Determining the Legality of an HOA Home Business

Operating a business from home is not uncommon, especially for startups and fledgling companies. But, not every homeowner may have the freedom to run a business out of their place of residence.

Every homeowners association is different, but most will run into the same basic problems. One such problem has to do with running an HOA home business. More specifically, should the association allow it?

Determining the Legality of an HOA Home Business

Operating a business from home is not uncommon, especially for startups and fledgling companies. But, not every homeowner may have the freedom to run a business out of their place of residence.

In an HOA community, for instance, restrictive covenants may exist prohibiting the use of homes for business purposes. Whether or not an HOA should allow an HOA home business, though, does not have an all-encompassing, black-and-white answer.

Can You Run a Business Out of Your Home?

When deciding whether or not to allow an HOA home business, the first thing your board should consider is its impact on the community. Not all home-based businesses bring problems.

Generally speaking, you should not allow any HOA home business that negatively affects the residents’ quiet enjoyment of their home. The business becomes a problem if it creates a nuisance within the community.

For example, if a homeowner sets up a car repair business out of their garage, anyone can easily see how that can be a problem. Car repairs make noise, and they can reduce the overall curb appeal in any given neighborhood.

Plus, there is the issue of clients coming and going, with cars parked in places where they should not be.

Outside of inspections, your HOA board will typically learn of a resident’s home business when someone else reports it. The reality is that only businesses that create a nuisance and disrupt the peace usually get reported. Then again, there is a big difference between a car repair shop and a business strictly confined to the computer.

Check Your Governing Documents

More often than not, your governing documents will contain provisions concerning home-based businesses in your HOA community.

Some are specific, going so far as to detail what types of business are not allowed, while others use general or vague language to give the board more room to act.

If your board encounters an HOA home business, check your CC&Rs to see if any covenants restricting home businesses exist.

If your governing documents have nothing to say about the matter, then consider amending them. It is infinitely better to set a precedent and lay down the rules for all homeowners than to deal with problems as they arise. When you set rules from the start, you can prevent home-based businesses from becoming a huge issue in your community.

What Business in HOA Community to Prohibit

Homeowners associations are residential communities. As such, if a homeowner decides to set up a home-based business that changes that characteristic, you must take action. The same goes for any type of business that disrupts the peace or prevents other homeowners from the quiet enjoyment of their residence. This typically includes businesses that deal with deliveries, have employees come in, or welcome customers into the property.

The general idea behind this is that the increased traffic could negatively affect the community and its residents. Strangers walking in and out of the neighborhood, cars parked everywhere, and delivery trucks arriving multiple times a day can greatly impact how residents feel. The issues of safety and privacy naturally come up.

In addition to that, increased vehicle traffic can clog the streets or deal significant damage to community streets. A lot of HOA communities, especially in private or gated ones, have streets that were not made for commercial traffic.

The constant passing of large delivery trucks could inflict heavy damages outside of normal wear and tear. Apart from creating a nuisance, such HOA home businesses can drive up expenses for the community and, in turn, the residents.

How to Enforce Rules for an HOA Home-Based Business

It is not enough to simply set rules and expect everyone to follow them. To make sure no one violates this covenant, your board should conduct regular inspections of the neighborhood to see if anything stands out.

You may also receive reports from angry neighbors. If you do, you must do your research first and not immediately act upon the complaint. A homeowner may claim that a fellow resident is operating a daycare out of their home. Without proper research, you may send a notice to someone who is actually just babysitting their nieces and nephews.

If you find that one of your residents is operating a business from home and going against your HOA rules or covenants, you must take action. Send the resident in question a notice informing them that they are in violation of the CC&Rs and asking them to cease operations.

Some residents will put up a fight. In such cases, negotiation is usually the best course of action. Your board should attempt to settle the dispute and reach an agreement. This agreement should work for both parties without compromising the community or its rules.

You can also take the matter to court. Though, keep in mind that litigation does not always work out for both parties and you may just end up fighting over who should cover the litigation fees.

Beware of Disability Claims

Ideally, asking homeowners to refrain from or shut down their HOA home business is enough to achieve results. Unfortunately, not all homeowners are as obliging as you would like them to be.

For some, their home-based business is their entire livelihood, and they will fight to keep it going. You may even face off with a homeowner that claims their disability should force you to make an exception.

A resident may claim that their disability prevents them from working outside of their home, which means your board should not discriminate against them by shutting down their HOA home business. However, you must not take their word at face value.

It is essential to investigate further and ask why you must make a disability accommodation. Refrain from asking for medical records, though. Instead, ask for documents like verification from a medical professional or proof of disability benefits.

Remember the Purpose of an HOA

As you can see, there are many things to consider when deciding whether or not to allow residents to operate an HOA home business. Approving such operations comes with consequences, such as disrupting the peace in the community and making residents feel less safe.

On the other hand, when you prohibit home-based businesses, expect some pushback from a handful of homeowners and maybe even some disability claims. Generally, though, the main purpose of an HOA is to maintain property values, and a nuisance to the neighborhood will make it hard to achieve that goal.

If you require help with the day-to-day operations in your community, consider an HOA management company like us. Feel free to contact us at 865.315.7505 or email us at help@csmhoa.com for more information.

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Is Running an HOA Home Business Allowed? | Clark Simson Miller
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