Can HOA shut down home business? This is a question many board members and homeowners ask. Whether or not an HOA has the authority to shut down a home business depends on state laws and the governing documents. Board members should familiarize themselves with these two things to avoid potential liability.
Can HOA Shut Down a Home Business?
Home businesses are pretty common, especially with many Americans working from home today. While homeowners can save money on overhead, rent, and utilities, running a home business may not be possible due to their HOA’s rules.
Homeowners associations are known for prohibiting or restricting activities that might interfere with the community’s peace and character. This does not mean that HOAs have unilateral power when it comes to home businesses.
Can an HOA prohibit a home business? There are two factors to consider: state or local laws and the association’s governing documents.
State and Local Laws
First, it is important to check state and local laws, particularly zoning laws. Cities and municipalities often have zoning laws that prevent homeowners from using their homes for commercial purposes. If a home is only zoned for residential use, the owner can’t operate a business out of it.
Board members should refer to zoning laws for a better understanding. If zoning laws already prohibit a homeowner from running a home business, the HOA board would not need to dive in further. The board can simply cite the zoning ordinance and let the homeowner know they are in violation of it.
Some states also prevent HOAs from prohibiting home businesses. An example of this is Virginia.
As per Section 55.1-1821 of the Virginia Property Owners’ Association Act, HOAs cannot prohibit home-based businesses outright unless their declaration explicitly does so. Instead, they can impose reasonable restrictions on the time, place, and manner of the operations. They can also impose reasonable restrictions on sign displays.
Governing Documents
Can HOA prevent home business? It is essential to read through the association’s governing documents. An HOA generally has the authority to restrict home businesses if the CC&Rs or bylaws say so.
If the governing documents are silent, the HOA board should consider amending them. Amending the CC&Rs or bylaws usually requires a membership vote. The board can’t simply pass a resolution and create a rule out of nowhere.
Home Business in HOA: Things to Consider
When deciding whether or not to allow home businesses, the HOA board must consider three things: quiet enjoyment, added traffic, and the community’s character. Let’s break these down below.
Quiet Enjoyment
In general, an HOA should consider prohibiting home businesses that negatively impact the quiet enjoyment of residents. If a business creates a nuisance for others, then it should not be allowed.
Operating a car rental place out of a home, for instance, can cause a lot of problems. First, there is the issue of storing the rental cars within the neighborhood. The homeowner likely doesn’t have enough parking space for all their rental cars, so they would need to park them around the community. The constant comings and goings of customers may also disturb neighbors.
Added Traffic
If the home business causes additional traffic within the community, other residents will likely complain. Businesses that employ workers and invite customers are prime examples. Workers and customers would need a place to park, which would add to traffic and congestion.
Plus, there’s also the added concern of security. Residents don’t want strangers constantly coming and going from the community, especially a gated one. A home business can disrupt the peace and make residents feel unsafe in their own neighborhood.
Character
Lastly, the HOA board should consider prohibiting home businesses that change the character of the community. Someone working from a home office with no employees, for instance, won’t pose any problems compared to a full-blown business, such as a hair salon or bed and breakfast.
HOA Rules for Home Businesses
It is normal for an HOA to prohibit home businesses, but there is some nuance to the matter. Not all home businesses negatively affect the association. For example, someone who just works from a home office, like a freelance writer, likely won’t cause any problems for the HOA. Boards should be more wary of home businesses that employ workers and invite clients over.
A good workaround is to only restrict home businesses that interfere with residents’ quiet enjoyment and the character of the neighborhood. There should be no issue with teachers who take their work home with them or web designers who work remotely. On the other hand, there are several problems that can arise from a car rental place or a hair salon that has employees, invites customers, and stores vehicles.
With this in mind, an HOA might want to prohibit home businesses that employ workers and accept clients in person. An HOA might also want to restrict commercial signs and vehicles, which would bring down curb appeal.
Enforcing Rules of HOA Home Businesses
With rules now in place, the HOA board must work to enforce them consistently and fairly. This includes conducting inspections without entering people’s homes and accepting reports from neighbors.
Keep in mind that neighbors may not always provide accurate details. Board members must investigate the issue and do proper research first. From there, the board can determine if there is truly a violation of the rules. If a violation does exist, the HOA board should proceed with standard enforcement procedures outlined within its governing documents.
Frequently Asked Questions
Can the HOA shut down a home business in North Carolina?
Neither the North Carolina Planned Community Act nor the North Carolina Condominium Act specifically addresses home-based businesses. Homeowners’ associations in North Carolina must refer to their governing documents for guidance. It is also worth checking local zoning laws.
Can HOA shut down a home business in South Carolina?
In South Carolina, the Homeowners Association Act does not explicitly regulate home-based businesses. As with North Carolina, whether or not HOAs can restrict home businesses depends on the governing documents. Zoning laws should also be taken into account.
Can HOA shut down a home business in Tennessee?
The Tennessee Condominium Act of 2008 does not provide specific statutes regarding the operation of home-based businesses within HOA communities. Homeowners and board members should review their governing documents and local zoning laws for more information.
Can HOA shut down a home business in Virginia?
According to Section 55.1-1821 of the Virginia Property Owners’ Association Act, HOAs cannot prohibit home-based businesses outright unless explicitly stated in the declaration. They can impose reasonable restrictions on time, place, and manner of operations as well as signage. Additionally, local zoning laws must still be followed.
Can an HOA Shut Down a Home Business? Answered!
In short, whether or not an HOA can shut down a home business depends on state and local laws as well as the governing documents. Most HOAs have the authority to do so in accordance with their CC&Rs or bylaws. When making a decision either way, board members should take all considerations into account. It is equally important to create rules on home businesses and enforce them consistently.
Cedar Management Group provides HOA management services, including legal assistance, to homeowners associations and condominiums. Call us today at (877) 252-3327 or email us at help@mycmg.com to get started!
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