HOME-BASED BUSINESSES IN
THE HIGH-TECH ERA
by Thomas C. Schild
Bright colors flashing on a computer screen. Fax machines whirring. Copiers and laser printers purring. These are the essentials of home-based businesses in the high-tech era.
Barely fifteen years ago, there were no personal computers. Only three years ago, the Internet and e-mail were generally unknown and mysterious. Today, home computers are commonplace and the Internet easily allows business to be conducted from home.
There are currently about 13 million home-based businesses in the United States with 100,000 new home-based businesses every month! By some estimates, there are already as many as 40 million people working out the their home. As computer access increases, the number of home-based businesses is expected to grow even more dramatically in the future.
Moreover, in recent years, local and state governments have been enacting zoning ordinances and other laws which encourage home-based businesses. However, many community associations are governed by covenants which place restrictions or outright bans on home-based businesses operating within the community. Therefore, the stage is set for increased conflict between homeowners operating home-based businesses and association boards seeking to enforce the covenants that restrict business activity.
Most associations do not object to businesses which do not adversely affect the residential character of the community, even where the covenant prohibits all business activity, and few associations have adopted a home-based business policy to establish the limit of permitted business activity.
Adopting a policy on home-based businesses will provide homeowners with greater certainty as to what business activity is allowed. And, it will make it easier for the board to enforce the covenants against businesses that truly are objectionable.
Developing a Policy
The first step in developing a policy on home-based businesses is to carefully review what your association's covenants and bylaws say about business activity. Some association legal documents prohibit all business activity; some allow business use with board approval. Others limit business use to professional offices or uses allowed by local zoning. Another common variant is for covenants to require "residential use" of the property without a direct prohibition on business activity. Depending on how restrictive or permissive the covenants are, it may be necessary to amend the covenants to reflect the desired limits on business activity in the community.
A board-adopted policy on home-based businesses is most appropriate where the goal is to relax strict enforcement of the governing documents. A board policy cannot be used to establish new restrictions, but can provide guidance to homeowners on how the board intends to apply the business-use restrictions in the covenants.
In developing a home-based business policy, the primary concern should be to protect against adverse external impacts of the business activity. To do this, the policy should establish objective criteria regarding items such as the number and frequency of customer visits; the number of employees; the frequency and times of delivery and pick-up; noises; and odors. Other items to be addressed might include parking of commercial vehicles and trucks; the use and storage of hazardous materials; and signage.
Although association restrictions on business activity can be more stringent than local zoning ordinances, the board should consider what business is allowed in residential areas under the local zoning ordinances. An overly restrictive association limitation may make resale of homes in the community more difficult, especially if the business activity is allowed by the local zoning ordinance and can be conducted in nearby communities.
Other laws may also impact association restriction on home-based business. In Maryland, for instance, state law allows home-based child care businesses unless the association documents expressly prohibits such activity. Legislation is currently under consideration in Maryland to allow all home-based businesses which do not adversely affect the community.
To protect against an unintended waiver of business restrictions, a home-based business policy might also require homeowners to provide information about the business to the association and obtain association approval for their business. This will help ensure that only businesses which comply with the established standards are allowed.
Finally, when developing a policy on home-based businesses, homeowner input should be sought since broad community support is essential for successful enforcement of business restrictions.
Enforcing Business Restrictions
When a home-based business is having an unwanted impact on the community, the board should act promptly to notify the homeowner of the objectionable conduct. For instance, there may be excessive traffic, business signage, or noise outside of the dwelling. To encourage cooperation by the homeowner, focus should be on the specific adverse impacts, rather than telling the homeowner to shut down their business entirely.
If the concern is traffic and use of the common parking area, the board should document the problem and be prepared to show why the impact of the objectionable business is greater than other home businesses in the community. The homeowner will almost certainly claim selective enforcement or discrimination and the board will need to show its enforcement of the covenant to be fair and uniform.
Where the board finds the home business continues to be in violation of the covenants, then a court suit to enforce the covenants may be necessary. Otherwise, the objectionable business activity will become the new standard for evaluating other home business in the community.
With more home-based businesses on the horizon, the key to minimizing conflict with homeowners is to clearly define the limits of permitted businesses and enforce the associations covenants and home business policy fairly and uniformly.
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Reprinted with permission from Quorum Magazine, January 1998, a publication of the Washington Metropolitan Chapter of the Community Associations Institute. Copyright 1998 Washington Metropolitan Chapter Community Associations Institute.
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