Business in homes: how do YOU adjudicate?

Wow, excellent post....

In our HOA, nothing would be done until someone complained. If the complaint were legitimate, the offending homeowner would be sent a letter informing him/her of the offense and offering them an opportunity to meet with the board (or an individual panel of non-board members)to explain their offense. I can almost guarantee you that of the offenses mentioned above (any of them) that if the unit owner were otherwise compliant with dues and no other rules violations, they would be offered a bye (we would not fine them nor make them cease their business).

It would always be nice to see what the CC&R’s say by posting them so that we can read them, next let’s be reasonable about what we are trying to enforce when you are saying that this person is running a business from their home. The ACC should ask these questions?

1. Does the person advertise that they are running a business from the home?
Are there signs on the property?
Do they advertise in the paper?

2. Do they have a license to run a business from the home this can be checked very easy?
3. Is it causing unknown customers to come in and out of the neighborhood?

This is just an example as for how you should approach this problem be cause the key is if it is a business that does not have customer coming and going and they are noot advertising then it should be ok, unless that person is running an illegal business drugs, guns you can understand what I am trying to say.

I hope this help, have a great day.

wardell

The only concern the association should have if the home business creates additional traffic in the neigborhood. Otherwise,the assocaition should have no objection to a home business unless an unlawful buiness is operated.

Charlie Tiano

All great answers, thank for your discussions so far.

One "wrench" to throw into the works: Since our CC&R's state absolutely "no businesses" (and does not say "no business that causes problems, too much noise, odors, extra traffic, etc.), what can we do as the board? If we ignore these non-problematic businesses, how can we then rightly enforce other covenants? Won't people be able to point to this one and say "Why such selective enforcement? Why do you enforce Rule 7, about dogs, and not rule 14, about home businesses?" If a board refuses to enforce one rule, can they legitimately enforce any?

luckily for us, we have a nice busy body with little else to do but run around the association looking for potential violations of the rules to report/file complaints about. And people are thinking, as they chat with her in their driveways about their life, that she is just making conversation. So, when they admit they just finished an article for a deadline, or had a bad day on the phone lines, or the kid they were babysitting threw up all over the couch, etc., they think she is just interested. Little do they know she's taking every word down for a formal complaint to the board.

Brian, your busy body's complaints are hearsay, not evidence. As a managing agent I would not even send a warning letter without verification of a violation. I do check out every complaint by an owner and take photos to document violations.

After there is documented evidence the owner need is notified of the violation, provided a picture of the violation (when applicable), given a timeframe for correction, the right to have a Hearing, and the potential of a fine. If the violation is not corrected within the reasonable timeframe then a second letter is sent which advises they have a right to a Hearing or if they waive the Hearing there is a fine of $XX for non-compliance as provided in their copy of Rules and Regulations on Enforcement of Covenants and Rules.

The HOA Hearing allows the alledged violator the opportunity to challenge the violation and to become more thoroughly aware of the evidence. If these procedure are followed and the Board has a solid case then an owner would be foolish to persue the matter.

Okay, just like any good attorney, I'm here to throw a wrench in things. Hopefully, not too big of a wrench. All of the previous posts have been very logical and make sense, but the law isn't always logical. Any community, when faced with questions about whether to enforce a recorded restrictions should consider the following:
1. Is the restriction clear on its face? If not, you can certainly adopt resolutions which clarify what is meant. This one sounds pretty clear.
2. Is the Association REQUIRED to enforce? What do the Bylaws and Declaration say? Is it disretionary? If discretionary then I think the Board will want to use its best judgment in deciding what to do about alleged violations. If it is not discretionary then the board must weigh the risk of enforcing with the risk of a lawsuit by an owner (your busy body) who wants it enforced and by failing to do so, the board is in violtion of the declaration.
3. If you don't have discretion then I'd suggest a written legal opinion that hopefully tells you not to enforce because of the situation, the proof issues, the facts, etc. This will then protect the board if the busy body sues you.
4. This is a prime example of when an amendment would probably be successful. If owners don't want it enforced then you should amend the declaration to remove the restriction or rewrite it to follow the okay to have business in home unless you can hear it, smell it, see it approach.

you can prove kids in daycare the same way you would prove pets in a home, sattelite dishes in yards, clothesline poles and illegal porches or swingsets... in our HOA, it's called "visible from neighboring property".

If it can be seen from the street or a neighbor's property, you can bet someone will see it and file a complaint.

having an occasional yard sale or garage sale wouldn't likely be considered "running a business" from the home. The key word is "occasional"... I have known people who have garage sales 40 weekends a year, and i would say that they are running it as a business.

One key issue, at least from a legal/tax standpoint: Are the items being sold in the yard sale "extra" items from the home, or are they items purchased with the intent to resell. It can be a hard distinction to make, but someone who peruses flea markets, buys an item, cleans it up and resells it is running a business. Or buys a dozen boxes of XXXX, and then resells it still in the package. Someone who sells their unused exercise bike is having a garage sale.

Personally, I would object to several children yelling, crying and running around. Especoally if fences are prohiniyed as well. I would think it may be a legal issue for safely and liability.

That is an interesting point of view, one which I had not tought of, but if a contractor is building on spec, then yes, that is a business, but does he live there? I think that if he had heavy equipment than you would have every right to stop him seeing he not only is causing a grave inconvenience, but his heavy equipment is teariing up your roads and you will be assessed to pay for the repaving and the builder get by scot free yet and has made a handsome profit. I think if the members of your community agree on that then go ahead, but if they didn't, them I'd say to push for an admendment for no building on spec.

We have numerous contractors who are members, live full-time in our gated community and work from their homes. Their shops are their trucks; as anyone who has run a small contracting business knows and a desk, phone and computer in their home.
On occasion and when the opportunity presents itself, those members will buy a piece of property in our assoc., build on it and sell it.
Just like they would pick up a piece of property anywhere else.
We don't adjudicate but we did have a previous Board that attack members who were renting because of the whole 'no business or commercial activity clause'.
At our AGM in June we plan on facilitating an open forum with our members to discuss this issue in our bylaws.

We are having a grave situation with this issue in our HOA. We have a "no business" clause in our R&Rs, but it does exempt telecommuting, keeping businesspapers/records/library, contacting customers by phone/email, bookeping& accounting, etc. It even exempts daycares under four non-related children under one roof (following with similar language in the Village ordinances.) HOWEVER, we have two landscapers who have decided that it is their right to park their bobcats/bulldozers/trailers, etc. and loaded pick-ups in their driveways. Mind you, we have a "no trucks" clause in addition to a "no advertising--no lettered vehicles" clause for parking in driveways--other than temporary.

It seems the landscapers both chose small model houses with only 2 car garages (when three and four-car tandem garages were available. They park across the sidewalk into their apron, causing pedestrians/children to have to walk into the street to pass their house--which is right next to the children's park! We are in the process of the "builder-run association turn-over" excitement, so none of the rules have been enforced thusfar. We have one "activist" who has submitted 154 complaints in a week, documenting every four hours the status of the trucks parked, substantiated with witness signatures, license plate numbers and photos. He was a member of a HOA in the past where a fellow owner sued the HOA and each unit was assessed over $2,000 in that judgement--except for him and a few others, who formed a "class action" against the HOA in order to remain exempt. So this guy "knows the ropes," so to speak, and is in a "get them before they get you" mentality. Unfortunately, he is putting this brand new board in the position of having to be the "bad guys" or face neglect of their fiduciary duties as members of the board. The one extra caveat to our situation is that we have a property management company that is supposed to be handling the complaints/notices for the board (and has been employed since the inception of the community.) The "go-fer" for that company does not follow through with her job and was caught by another community not making her required rounds (by using a 24 hour surveliance camera at the entrance to the community and going through 2 weeks of tape with no sign of her.) She is "buddy-buddy" with said landscapers and has been giving them the "inside scoop" to the point where we had the owner of one of the landscaping companies show up on our doorstep shouting vulgarities and demanding the resignation of the board--and stating that he has a petition circulating to remove the board.

Again, this is a board that has only taken over less than 70 days ago and has dealt with issues regarding contracts, attorney hiring, finding a new property manager, establishing a new bank account, formulating a rules & regulations committee as well as handling the influx of spring "architechtural applications" for decks, patios, landscaping, etc. It has been a nightmare.

Our proposed solution was to send out a newsletter debunking the "rumorville grapevine" myths and explaining the process for filing complaints, filing applications for alterations and explaining some of the most commonly mistaken rules--while giving everyone a "first warning" without specifically fining or penalizing anyone. We set a date for an "open forum" for members to air their concerns, ask questions and basically clear the air. (Yes, we are looking into hiring security for the meeting after seeing examples of the tempers of some of the people in our neighborhood!)

I think if I was on the board to be, I would try to have a repore with the local Sheriff. If these landscapers are parking across the sidewalk, clearly that is against the law. The law should be taking care of that one; at the very least for the time being. I think if I lived there from the sounds of things, I'd be looking for a good realtor! Good Luck and don't let them rule!

The problem we are running into is that the subdivision is not 100% complete yet, so the builder has not turned the streets/parks over to the Village yet. We can't get them to do anything around here! Oh, to make things MORE interesting--we just found out that our builder is going bankrupt! So much for the bond they have with the city for the streets & parks! Does anyone know what liability we might have as a HOA if the builder goes belly-up prior to completion? Chatting with the mayor, he assured us that the letters of credit they certify with them are good...but you never know. This is Smalltown, USA and the developer is a home-town guy.

We are in Illinois--Western suburbs of Chicago. A few of the local HOA's are forming a town "Homeowners Association Alliance" to keep informed and support each other in serving on their respective boards to the best of their abilities.
We are currently stuck in our deal with the property management group. We gave them notice to terminate their contract, based upon the service we were receiving though we did not site a reason. We have another management group in the wings waiting. We were told we must wait 90 days, rather than the 30 days that would include dismissal for cause. Talking to others, we are just as bad off either way and we might run up some legal fees pushing for cause, so we are stuck. Unfortunately, our property management group holds the bank account in their banks with them issuing the checks. They require us to use their attorneys and them as the correspondence with the homeowners. (We went around that by printing and mass-mailing our own newletters at our own expense for the moment.) We have hired a lawyer group, however, they are awaiting first payment because the property management group won't pay them on our behalf--since we are "contracted" to use theirs. Our hands are pretty much tied. Especially when the person who is acting as our property manager--a glorified secretary with no prior experience, certification or training, is running amuck with our residents and siding with the greatest offenders and stirring up rumors and trouble.
Tonight is our first "open forum" since the new board has been in place and since the letters went out. I am expecting it to get pretty nasty. Fellow board members are literally frightened for their safety, due to the actions recently of one particular disgruntled homeowner.
To add fuel to the fire, one of the first "controversies" in the neighborhood was the installation of the first pool in the neighborhood. Because their lot was pie-shaped and faced 5 other properties, people were really upset. Particualarly, they were mad about the fence that came along with the pool. Being a "no-fence" community, the only loophole is for people with in-ground pools. (Above ground pools are not allowed.) This particular house got permission from the prior mentioned trouble-making property manager to not only fence her pool, but the entire yard. Rumors were that it was not allowed, but the whole thing was "legit" as far as permissions and permits go. There is nothing to be done about it. Now, we are going to be the third household to get a pool in the neighborhood. Our lot is sloped down 5 ft over a 45 ft length--so the back yard is pretty much useless for us. The kids turn their ankles on it and grass won't grow on it because the water drains right off. The previous owners had it backfilled when it was supposed to be an English look-out lot. They wanted a paver patio and didn't care about the rest. We just got approval last night from the architectural chairman, so we have our "permission" from the HOA, but I'm SURE it will come under fire. Wish us luck!