Home is Where the Business Is

In a past column, I (briefly) mentioned the concerns about having a business operating out of a residential condominium association. I need to expand on this a bit as it is becoming an issue in more associations.

Most older condominium associations (and many recent ones) have outright prohibitions on anything but using a home as a residence. The Declaration frequently contains language that limits uses in a residential unit to residential uses (how surprising), which implies things like sleeping, having a bedroom or three, a living room, a large television, and a kitchen. But more happens now in residential condominiums than sitting around reading or cooking a good meal, and therein lies the problem.

Most such documents were drafted prior to the advent of the Internet which allowed for the start of telecommuting and virtual meetings with clients. In today's world, the use of a residence is rarely limited to what were once called residential uses. Rather, people surf the Net, telecommute, buy and sell items on the Internet (eBay anyone?), make work calls from home, Skype with clients, and even run complete businesses from home.

In turn, this can lead to problems because, without looking at and amending any offending documents, a person who conducts these types of business actions in a residential condominium can find oneself fined and sued. And Boards can get in trouble for not enforcing provisions that prohibit business uses in residential condos.

As such, as with almost all matters in condominium living, it is best to find the balance between the interests of the Owners and the operation of the Association. The fact of the matter is that people work from home today, and your documents should reflect this reality.

According to U.S. Small Business Administration, over half of all small businesses begun in the last decade have been home based. In real terms that's over 38 million businesses operating out of residences. And these business come in all types, such as writing, blogging, researching, personal consultancies, music teaching, and in home daycare. This can lead to real problems.

If, for example, you have a counselor working with clients who suffer from severe psychoses or other mental health problems, a residential condominium might not be the ideal place for such a business in light of the risk of someone having a psychotic episode on residential grounds.

Or if you have an Owner who runs a daycare out of the home and parents arrive at the same time it can create parking problems. And the more businesses operated out of residential condominiums the more parking problems there will be.

And the residential area might not be zoned for a particular type of business. And local or State regulations may prohibit anyone from selling on site any products not produced on site.

What can Boards do? Create fair regulations that balance the right of owners in this day and age to work from home against the right of other owners to be able to find a parking space when they return home and to have peace and quiet when home.

Set regulations that require the business to be allowed by the City; prohibit any business from hiring employees other than the Owner; prohibit deliveries that occur more than once a week; require the Owner to sign an indemnification so that if, for instance, a client comes on site, slips, falls, gets injured, and sues the Association the Owner will indemnify the Association and pay all legal costs incurred to defend the action; and prohibit the sale of any products on site.

All problems can be solved, and finding the balance between today's use of homes for businesses balanced against an Owner's right to peace and tranquility in their condominium can be found by well drafted provisions that allow the Board of Directors to determine what types of businesses are in the best interest of the Association with any such decision being allowed to be appealed for review at an Association meeting.

Get good guidance… and then go back to work.