The Housing Chronicles Blog: What happens when your business moves home?

Sunday, September 13, 2009

What happens when your business moves home?

With so many unemployed people starting their own businesses (and working out of their homes), it's quite possible that they're not aware of various rules and regulations on home businesses in their towns, cities and even HOAs. In New York City, the trend has already caused some friction between landlords and tenants, and if unemployment continues to be high -- which many are predicting over the next several years -- then this issue is not going away anytime soon. From a New York Times story:

As long as there have been homes, there have been home businesses. And for almost as long, there have been leases, landlords and laws that frowned upon home businesses. But in a challenging economy, more people are resorting to relocating businesses from shop fronts or other commercial spaces to spots under their own roofs. Others are starting businesses at home after losing jobs...

Landlords are often unaware that their tenants are operating home businesses; such enterprises come to the housing court’s attention only when a landlord catches on and decides to take steps to evict the offending tenant. In-house businesses wind up in still other courts when city statutes — like plumbing regulations and occupancy rules — are violated...

Operating a business in your apartment can be a simple lease violation, or illegal and in violation of city codes. Businesses that have a constant stream of foot traffic — hair salons, masseuses — often violate reasonable-use clauses in lease agreements. An eBay-type sales business might also be a problem if there’s continual shipping and delivery.

It is notoriously difficult to be evicted in New York, but if taken to court and found in breach of a lease, a tenant is typically given 10 days to cure, or stop, the problem, or face eviction.

“Landlords and co-op boards are very protective of the other tenants’ privacy, as well as protecting their buildings against people coming in and coming out without security,” said Gary J. Wachtel, a lawyer who specializes in landlord-tenant disputes.

Even at-home dog groomers or cat boarders can run into trouble with their leases. “Foot traffic not only could be foot traffic but animal traffic, too,” Mr. Wachtel said. “Paw traffic."

Residents who modify utilities for commercial use or who cause overcrowding in an apartment face stiff penalties. If the landlord decides to take them to court, they may be found guilty of nuisance violations, and are given no option to cure the situation. Eviction proceedings could start immediately...

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