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Subject: Covenants that allow home based buisnesses with restrictions
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JenniferC16
(Alabama)

Posts:1


04/22/2021 7:37 AM  
Wondering if anyone has any examples of their covenants that allow home based bhisness. I've tried to find some and I've come up empty.
CathyA3
(Ohio)

Posts:1881


04/22/2021 8:01 AM  
I think the big issue is local zoning laws - HOAs doesn't really control this decision. If you're zoned residential only, any business may be a no-go.

In addition, from what I've heard this can be a slippery slope. How can you allow some businesses but not others without opening up the board to constant conflict and arguing?

Finally, your insurance will come into play. If you don't carry the appropriate insurance, if someone's client comes onto the property, gets hurt and sues the HOA, your insurer may look at this and say "nope, this was a business activity, and your residential insurance doesn't cover it" - and the HOA will be left with an uninsured loss. If you do carry such insurance, you'll have homeowners without businesses subsidizing the business expenses of others to some extent.

Having said that, I vaguely remember reading something about not being able to ban day care businesses. But I can't remember any details, and it really doesn't sound quite right. So take that with a huge grain of salt.

The one exception that I'm sure I remember is work-from-home stuff that involves sitting in front of a computer all day. The big difference is that there are no clients coming onto the property.
AugustinD


Posts:300


04/22/2021 8:22 AM  
Posted By JenniferC16 on 04/22/2021 7:37 AM
Wondering if anyone has any examples of their covenants that allow home based business. I've tried to find some and I've come up empty.


Put in your google search engine the following:

"declaration" "business" "covenants" "home-based" "Alabama"

Here are a few Alabama Declarations (of covenants) come up that include provisions that allow home based businesses under certain conditions. For example:
===
[Alabama HOA]
No Commercial Activities. No commercial activity
of any kind shall be conducted on any Lot or in any
Living Unit, without the written consent ofthe Board,
but nothing herein shall prohibit the carrying on of
promotional activities by the Developer or other
parties authorized in writing by the Developer. This
provision shall not preclude a home based business, as
long as no clients or customers enter upon the Lot or
Living Unit for the purpose of conducting business.
https://irp-cdn.multiscreensite.com/e11f00c5/files/uploaded/Stone%20Creek%20-%20Covenants.pdf
===
[Alabama HOA]
See Article III, Section 1 (d) at https://irp-cdn.multiscreensite.com/e11f00c5/files/uploaded/Bakers%20Farm%20-%20Covenants%5B1%5D.pdf
===
[Alabama HOA]

See Article II, Section 2.2 at https://www.legacyhomesal.com/images/uploaded/359021522570401_th_covenants.pdf

===


Non-Alabama Declarations on Home Based Businesses:

8.03. No Lot, nor any building erected thereon shall at any time be used for the purpose
of any trade, business, manufacturing, or for public amusements, excluding home based
businesses approved by the Town of Collierville
-- https://www.yourmagnoliahome.com/wp-content/uploads/2018/02/Shepherds-Creek-Covenants.pdf
===
4.10 Home-Based Businesses
Home-based businesses are permitted provided the following criteria are met:
• It is not evident that home-based business is being conducted.
• No unusual traffic, other than normal residential traffic, is permitted. The Board may
have sole discretion as to whether amount of traffic generated is unusual.
• Only removable signs are permitted on vehicles and said vehicles must be parked
in the garage or the signs may be required to be removed while in the community.
• No items or equipment related to the business may be stored or otherwise kept on
owner’s lot outside of the dwelling or garage.
• Business activities should comply with all applicable federal, state and local laws.
--https://static1.squarespace.com/static/50d4920ee4b0fbb8d675f605/t/5714e9499f7266078a19d8f5/1460988233335/201604+Copper+Ridge+Rules+and+Regs++Application+-+With+ARC+Form.pdf
===
9.2.26, No-lmpact Home Based Businesses. Except as hereinafter provided, Lots
which are part -of a Neighborhood shaft be used for private and residential putposes only The
use of any 1,ot which is part of ,a Neighborhood within the Community as a "no-impact homebaSed business" (as such term is defined in Section 1113-I III of the Real Property Article.
Annotated Code of Maryland, 2003 Repl. Volume, as the same may be amended from time to
time) (the "Code") is allowed, stibject to the following provisions:
(a) An Owner or occupant intending to use his Lot which is part of a
Neighborhood as a no-impact home-based business shall notify the Community Association
before operating the no-impact home-based business.
(b) No-impact home-based businesses arc -xpressly prohibited in any
Community Common Area.
(c) No employees are used by the no-impact hoine- based business.
(d) Such additional requirements as may bc.. specified by the
Communi y Directors of the Community Association, to the extent permitted by applicable law.
The foregoing provisions of this Section are intended to be a restatement of the provisions of
Section 1113-111,I of the Code, and any future amendments or modifications thereto shall be
deemed incorporated by reference herein as a part hereof.
For purposes hereof. a•`no-impact home-based business" means a business that:
(a) Is consistent with the residential character of the Lot:
(b) Is subordinate to the use of the Lot for residential purposes and
requires no externa1.niodifieatons that detract from the residential appearance of the Lot;
(c) Uses no equipment or process that creates n oise, vibration, glare,
fumes, odors, or electrical or electronic interference detectable by neighbors or that causes an
increase of common expenses that can be solely and directly attributable to a no-impact home
based business; and
(d) Does not involve use, storage; or disposal of any grouping or
classification of materials that the United States Secretary of Transportation or the State of
Maryland Or any local governing body designated as a hazardous material.

A no-impact home-based business may not have any employees or signage ior create any
type of nuisance as a result of operating a no-impact home-based businc.ss and ilirther, the use
of the Lot as a no-impact home-based business may not violate any applicable law or ordinance.
--https://www.westphaliarowhoa.com/uploads/1/2/4/2/124214024/423_declaration_of_cc_r.pdf
JohnC46
(South Carolina)

Posts:10944


04/22/2021 12:37 PM  
Copied from our Covenants:

Section 2. Residential Use. All Lots shall be used for residential purposes exclusively, save those lots used by Declarant or one of Declarant's affiliates. No business or business activity shall be carried on, in or upon any Lot, except on those lots which may be used as a model, sales office or management office by Declarant or one of Declarant's affiliates, at any time except with the written approval of the Board and so long as the business or business activity is in compliance with the zoning requirements where the Lot is located. Leasing of a Lot shall not be considered a business or business activity. However, the Board may, but not be obligated to, permit a Lot to be used for business purposes so long as such business, in the sole discretion of the Board, does not: otherwise violate the provisions of the Declaration or Bylaws, does not create a disturbance and does not unduly increase traffic flow or parking congestion. The Board may issue rules regarding permitted business activities.

Not with standing the foregoing, under no circumstances shall any child or day care business (as hereinafter defined) be conducted or carried on. in or upon any Lot. A "child or day care business" is defined for the purposes hereof as a for profit child care facility or arrangement for three (3) or more children whether on a full-time, temporary, part time, seasonal, drop-in or after school basis, which facility or arrangement requires the issuance of a license under the South Carolina General Statutes and South Carolina Department of Health and Environmental Services rules and regulations
MelissaP1
(Alabama)

Posts:10126


04/22/2021 2:08 PM  
This is what people call "Putting a shingle up". That means that HOA's don't want one to put a sign up saying "Psychiatrist" and having someone opening a business. Especially one that brings in traffic and causes parking issues.

However, it doesn't mean one can't have a "business" in their home. People can sell "Tupperware" or do at home businesses that don't generate traffic or advertise. Nothing wrong if you want to make fishing lures in the privacy of your own home. Just don't put any kind of sign up advertising it.

Former HOA President
MikeH28
(Tennessee)

Posts:2


04/22/2021 3:24 PM  
The wild card in 2021 is the proliferation of " short term rental " Our HOA members are split, 50/50, on how to interpret our covenants on this issue... Slippery slope can end up being an understatement.
KerryL1
(California)

Posts:8014


04/22/2021 5:27 PM  
What DO your covenants say on this topic, Jennifer?
CathyA3
(Ohio)

Posts:1881


04/23/2021 5:02 AM  
Posted By MikeH28 on 04/22/2021 3:24 PM
The wild card in 2021 is the proliferation of " short term rental " Our HOA members are split, 50/50, on how to interpret our covenants on this issue... Slippery slope can end up being an understatement.




Our CC&Rs prohibit corporate and hotel-style "rentals", so no interpretation is necessary (this is in our rental restriction).

FWIW, more courts and local municipalities are coming around to the view that these "rentals" are not residential use but are in fact businesses, requiring permits and registration and the like. In addition, they run afoul of HOA restrictions that prohibit bringing clients onto the property. While you're debating this, be sure to check with your insurer about any liability issues that result from this influx of strangers. Finally, keep in mind that it can be difficult to enforce all of your other restrictions about nuisance activities and other things since these "renters" are here today and gone tomorrow, and the owners of the property have little interest in chasing down problem "tenants".

If it's possible, consider amending your covenants to prohibit the STRs altogether.

DavidG45
(Delaware)

Posts:52


04/28/2021 9:27 AM  
Here are ours:

(a) Residential Use Only.
The Lot Owners in the Planned Community
acknowledge and recognize the Planned Community is a community planned to achieve the
goals and objectives of providing an environment for families to live and enjoy the peace and quiet
of an attractive and distinctive residential community. In order to achieve a neighborhood of
serenity and peaceful use, the Lot Owners agree and covenant that the homes in the Planned
Community shall only be used for single-family residential purposes exclusively. No groups,
except families shall reside, occupy, rent or use a dwelling in the Planned Community. No
business activity of any kind, including by example but not limited to, rooming house, boarding
house, gift shop, antique shop, professional office or beauty/barber shop or the like or any trade of
any kind whatsoever including yard sales, garage sales or the like shall be carried on upon any Lot or
in any structure on a Lot; provided, however, that nothing contained herein shall be construed so
as to prohibit home offices so long as no stock in trade is kept or commodities sold, there are no
employees, patrons, customers or clients and no signs. Nothing herein shall be construed to
prevent the Declarant or any Dealer from constructing dwellings to be sold or leased, from
showing Lots, dwellings or models for the purpose of selling or leasing a Lot or dwelling shown
for another or from placing and maintaining signs, structures, storage places, facilities and offices
it deems necessary.
LetA
(Nevada)

Posts:1160


04/28/2021 1:48 PM  
Posted By CathyA3 on 04/22/2021 8:01 AM
I think the big issue is local zoning laws - HOAs doesn't really control this decision. If you're zoned residential only, any business may be a no-go.

In addition, from what I've heard this can be a slippery slope. How can you allow some businesses but not others without opening up the board to constant conflict and arguing?

Finally, your insurance will come into play. If you don't carry the appropriate insurance, if someone's client comes onto the property, gets hurt and sues the HOA, your insurer may look at this and say "nope, this was a business activity, and your residential insurance doesn't cover it" - and the HOA will be left with an uninsured loss. If you do carry such insurance, you'll have homeowners without businesses subsidizing the business expenses of others to some extent.

Having said that, I vaguely remember reading something about not being able to ban day care businesses. But I can't remember any details, and it really doesn't sound quite right. So take that with a huge grain of salt.

The one exception that I'm sure I remember is work-from-home stuff that involves sitting in front of a computer all day. The big difference is that there are no clients coming onto the property.





Cathy, we are going through a situation with a homeowner that rents out their home, and the renters are far more trouble that what it's worth. They currently are advertising a 24/7 clothing business on Google maps. Should we contact google and tell them this is a private gated residential community. Some people suggest that this is a front for illegal sales given that the renters are no strangers to local Leo's. I also do not see where the association can be liable at all if one of their visitors or cough cough ahem "buyers" were injured on HOA property. That injury claim would rest solely on the homeowner, and because the activity that drew them to the property is against the covenants and possible against local law, how can the HOA be held liable?
LetA
(Nevada)

Posts:1160


04/28/2021 1:55 PM  
Jennifer, what are you driving at as home bases business? Specifically????


There are many types of home based business aside from AirBnb which is entirely different animal and is being regulated by state and local ordnances, some override HOA covenants.
Hanging out a shingle for piano teachers, tutors, even Psychologist can have it's problems, especially with the way communities have been designed in the last 25-30 years. On-street parking and size of a home's driveway are two challenges for modern covenant governed communities.
KerryL1
(California)

Posts:8014


04/29/2021 5:47 AM  

This is what our CA high rise CC&Rs says:

7.1.1 Residential Use. The Residential Condominiums shall be used for residential purposes only; provided, however, any Residential Condominiums may be used incidentally for the purpose of operating a home based small business if, and only if, (a) the business is operated solely within the Residential Condominiums, (b) the business is limited to arts and crafts, the rendition of professional services or other similar activities, (c) the business is operated by the Owner of the Residential Condominiums whose principal residence is the Residential Condominiums, by a tenant whose principal residence is the Residential Condominiums or by a member of such Owner's or tenant's family whose principal residence is the Residential Condominiums, (d) the operation of the business is permitted by, and is at all times in compliance with, all applicable laws, and (e) the operation of the business does not result in (i) the violation of any of the other provisions of this Declaration, (ii) any unreasonable increase in the flow of traffic within the Property, (iii) any odor, noise, or vibration outside of the Residential Condominiums, or (iv) parking problems within the Project. No other use shall be allowed except as specifically permitted by local ordinance.

7.1.2 Commercial Use. Except as otherwise provided in this Declaration, including without limitation Section 7.1 above, no part of the Project shall be used or caused, allowed, or authorized to be used in any way, directly or indirectly, for any business, commercial, manufacturing, mercantile, storing, vending, or other such non-residential purpose.
CathyA3
(Ohio)

Posts:1881


04/29/2021 5:55 AM  
Posted By LetA on 04/28/2021 1:48 PM
<... snip ...

Cathy, we are going through a situation with a homeowner that rents out their home, and the renters are far more trouble that what it's worth. They currently are advertising a 24/7 clothing business on Google maps. Should we contact google and tell them this is a private gated residential community. Some people suggest that this is a front for illegal sales given that the renters are no strangers to local Leo's. I also do not see where the association can be liable at all if one of their visitors or cough cough ahem "buyers" were injured on HOA property. That injury claim would rest solely on the homeowner, and because the activity that drew them to the property is against the covenants and possible against local law, how can the HOA be held liable?




If an invitee is injured on common elements, the HOA is potentially liable - if the person is injured on the homeowner's property, then the homeowner is on the hook.

My association's attorney is adamant about not allowing yard sales in condo communities because just about everything is common elements. He's seen communities take a huge financial hit when a visitor gets hurt, sues the association, and the association's insurer says "no, that was a business activity, you're not covered for this".

You're right that if the association has made it clear that the particular activity is a violation of the CC&Rs and the association has been enforcing the CC&Rs, then you stand a better chance of passing the liability to the homeowner - but you should double check with your insurance agent to be sure. I would think this sort of thing could lead to long drawn out legal wrangling, which isn't great even if you come out on top at the end. (A lot of the communities in my area have been putting up No Trespassing signs lately, which I assume is to reduce liability.)

As for your community, if neighbors see signs of illegal activity going on, they should call the police. Google sometimes gets locations wrong - for example if a business gives Google the wrong GEO codes. But it may be interesting to see what you can find out about that alleged business.
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