Can Homeowners Run A Home Business In HOA Homes?

As more and more people start to work out of their homes, homeowners associations are facing an avalanche of problems. Should associations allow residents to operate a home business in HOA communities?

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As more and more people start to work out of their homes, homeowners associations are facing an avalanche of problems. Should associations allow residents to operate a home business in HOA communities?


Is Running a Home Business in HOA Homes Allowed?

The COVID-19 pandemic forced many employees to turn to home-based work. And the benefits of remote work immediately became clear. While most companies had no other choice but to shift to a work-from-home setup, a good number of them have continued with this remote structure or a hybrid system well past the pandemic.

But, even before COVID-19, some homeowners were already working from home. This came in the form of freelance work or a full-blown business operating right out of their garage. Regardless, communities today are seeing a growing number of home-based businesses. But, can homeowners even run a home business in HOA houses?

The answer is not as clear-cut as you might like it to be. It really depends on the association’s governing documents. Sometimes, local ordinances won’t let homeowners run a business in a residential zone. But, when state or local laws are silent, the best place to turn to is the bylaws and CC&Rs.

Most associations prohibit owners from using their homes for anything other than residential purposes. Others don’t allow commercial or business activities to take place within the homes, with the term “commercial” covering a broad spectrum of uses. These include manufacturing, storage, and other non-residential purposes.

Keep in mind that local or municipal ordinances don’t necessarily trump the association’s rules. If a local ordinance does permit home-based businesses in the area, homeowners still may not be able to operate a business from home if the governing documents prohibit it. The only exception to this is when the state and local law explicitly states that it supersedes the HOA’s provisions.


Potential Problems With Home Businesses in HOAs

Homeowners may find it difficult to understand why associations are so against home businesses. But, there are real consequences that come with them.


Safety and Security Issues

Depending on the type of business, a home might see many customers and employees coming in and out of the neighborhood. This is a problem for non-gated communities but even more so for gated communities where access is typically restricted to residents and their guests. When strangers are allowed to come and go as they please, other residents might feel unsafe.

In addition to this, some businesses may store hazardous materials within the home. This puts the entire neighborhood at risk.


Nuisance Issues

Beyond safety and security, having customers and employees come and go can create a nuisance for neighbors. It essentially turns a quiet neighborhood into a busy one. Furthermore, commercial or delivery vehicles can cause a traffic problem in the community.

Homeowners have a right to quiet enjoyment. That means they should be able to use and occupy their homes without disturbance. And home businesses can negatively affect this right.


Curb Appeal Issues

Lastly, home businesses can cause curb appeal to plummet. Let’s face it — commercial vehicles parked everywhere and commercial signs hanging from doorways don’t exactly scream “attractive.” No one wants to live in a loud and busy neighborhood. And, with curb appeal down, property values will soon follow.


Reasonable Rules on a Home Business in HOA Communities

running a home business in hoaWhile it is not uncommon for associations to ban all types of home businesses, such a rule might be unfair to businesses that don’t negatively impact the community. For instance, someone who works from home as a freelance writer doesn’t pose the same issues as a business that has employees and frequent customers/visitors would.

A good compromise is to only prohibit home-based businesses that alter the character and nature of the community. Teachers grading papers at home shouldn’t be a problem, but a home-based hair salon should. In that sense, an HOA may allow owners to use a portion of their house as a home office without trouble, provided it follows local zoning laws as well.

Another way to regulate home businesses is to prohibit employees other than the residents of the homes. An association may also want to restrict customers from using the home for business purposes or simply regulate the frequency of customers. Other rules can include prohibiting commercial signs and vehicles.

When it comes to deliveries, though, it may be challenging to know where to draw the line. When someone often receives deliveries at home, it does not automatically mean they are running a business. Some homeowners just love to shop online.


Day Care Homes and Residential Care Facilities

In some states, specific types of non-residential-use homes are protected by law. California is a good example of this. According to California law, homeowners associations can’t prohibit the following:

HOA boards should review the laws in their state and local areas to avoid potential liability. If no one on the board has experience with the law, it is best to seek help from an attorney or HOA management company.


The Board’s Authority to Act on HOA Home-Based Business

If an association wishes to prohibit or regulate home-based businesses, it must make sure to include such a provision in the governing documents. Boards generally do not have the authority to enforce a rule that doesn’t exist in the bylaws, CC&Rs, or operating rules. Additionally, when a rule exists in the documents, courts tend to enforce it in the event of legal action against the association. Creating a standard is imperative.

If this restriction isn’t in the governing documents yet, the board should consider making an amendment. Amending the operating rules usually only requires the board to pass a resolution. But, for changes to the declaration (CC&Rs), most associations need a majority vote of approval from the membership.


Don’t Be Afraid to Ask for Help

Regulating a home business in HOA communities can be tricky if you don’t know where to begin. But, with the help of an HOA management company, your board can navigate through the ins and outs of the law more easily.

Start looking for a reliable HOA management company in your area using our online directory!



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