By Pamela Babcock
©2020 Community Associations Institute
THE COVID-19 PANDEMIC has forced many to work remotely. In addition, as job losses have soared and millions of Americans remain unemployed, side hustles to make ends meet are flourishing.
Across the country, there are reports of a growing number of learning pods, backyard fitness classes, home-based daycares, impromptu backyard kids' camps, pet groomers and hair stylists working from home, as well as artistic entrepreneurs looking to market everything from refinished furniture to handmade cornhole lawn games.
Generally, associations have the right to restrict home-based businesses via their covenants through provisions designed to maintain the residential qualities of the community. There are also times when state and local regulations may come into play.
As more home-based businesses have emerged since pandemic lockdowns began, some community association leaders say they feel their neighbors' pain and are trying to be more flexible. Remote work for companies is only expected to grow. And some say it's time to revisit rules that define or might restrict home-based businesses to see whether they need to be modified to reflect today's modern business and economic environment.
William Z. Kolobaric, a condominium and real estate attorney with Hirzel Law in Farmington, Mich., says he's seeing an uptick in hair stylists opening their condominiums and townhomes to customers, which has caused “not only an uptick in noise and traffic" but also complaints about the smell of dyeing hair, particularly if the unit where the bleaching and blowouts are being done is near the middle of the building.
Meanwhile, an entrepreneurial resident in a 55-plus community has launched a landscape design business and is planting trees and shrubs for neighbors. Kolobaric says the venture has brought “a large increase in the number of architectural design requests that the board has to review and approve," particularly because his prices are good, the community is relatively new, and the original landscaping is minimal.
Kolobaric says most of the firm's estimated 300 Greater Detroit-area communities are being more flexible with home-based businesses “unless there is an inordinate amount of traffic, noise," or other negative impact.
“The boards understand that these are not normal times. There is no benefit to litigating matters where it is truly uncertain how a court will weigh the competing values of protecting a community, and upholding the contractual provisions found in the governing documents, against the societal values of protecting an individual from the unknown consequences of the virus and forcing them to go to work when they can work from home," Kolobaric explains.
To lessen potential problems, some communities are requesting that people schedule deliveries on certain days and times, ensure that clients coming to their home or unit park in the driveway or designated spot, and limit hours to those deemed “reasonable."
“We are working to find a way to recognize the effort that they are trying to put into what they are doing as long as it does not have a negative impact on the community."
Jan Skopecek, treasurer of Spring Lake Estates Homeowners Association in Trafalgar, Ind., says the community of 142-single-family homes south of Indianapolis also is seeing businesses emerging, particularly among residents working to replace lost income due to reduced hours or loss of jobs. In addition to word of mouth, the board often becomes aware of the ventures as the residents advertise or post information on social media.
One owner, who has begun refinishing furniture and making country farmhouse-style wooden signs, has been holding “open houses" every other month to sell the goods. While it's drawing additional traffic, Skopecek says the community plans to allow it for now. Another resident has launched an at-home computer repair business, and a third has begun making and selling cornhole lawn game boards. Traffic to the latter two operations has been negligible.
“We are working to find a way to recognize the effort that they are trying to put into what they are doing as long as it does not have a negative impact on the community," Skopecek says.
Spring Lake Estates' covenants currently state homes are strictly for residential use but, at an Oct. 15 annual meeting, members were set to vote on an amendment that would allow home-based businesses with several restrictions on equipment, smells, fumes, or vibrations outside the home. The proposed change also would prohibit exterior signage, excessive traffic, and anything that would interfere with the enjoyment of other residents.
Since the pandemic hit, Skopecek notes that the board has been more flexible with rules prohibiting above-ground swimming pools as well as campers and boats in driveways since some residents are using this time to service them for future personal use or potential sale.
Many residents also are working remotely for their employers, and Skopecek says having so many people home taking long walks has fostered better connections. She adds that she has been heartened by gestures such as a stay-at-home parent offering to help a neighbor working virtually by supervising homework time or by just taking the kids outside to give the virtual worker time to get off a Zoom meeting and finish their day.
“There's a connection within our community that wasn't there before, and we are working together to continue to foster that feeling of community," Skopecek says.
Hilton Head Plantation Property Owners' Association in South Carolina has seen a number of learning pods pop up in homes where a teacher is hired to work with children in a family or several neighborhood kids if schools are closed or parents are reluctant with in-person learning.
When summer ended, many counselors from the community's summer camp were hired by residents desperate for child care. Parents got a bunch of neighborhood kids together so counselors could provide backyard mini sports camps and other activities to keep children busy, according to General Manager T. Peter Kristian, CMCA, LSM, PCAM, a CAI past president.
Meanwhile, a number of fitness instructors have started backyard and driveway classes and, in turn, launched or grown their personal training businesses.
Kristian says there have been no complaints to date, and he doesn't see any of this in violation of the community covenants. While they state a single-family dwelling unit can't include uses for a medical, entertainment, or commercial facility, they add that using a portion of a home as an office is OK if it doesn't create “regular student, customer, employee, or client traffic," there are no signs or logos identifying the business, and any business activity isn't apparent and can't be detected by sight, smell, or sound from the exterior of the residence.
“If it doesn't make a noise, emit a smell, or cause traffic problems, we don't really get into a twist about it," Kristian says.
Like many areas of the country outside of cities, home sales in the large-scale community are hot. Once largely retirees, the association is seeing an influx of younger homeowners still in the workforce. Kristian says for those who plan to work from home, it's an ideal location since internet and mobile phone service, once slow and spotty on the barrier island, were upgraded several years ago. Meanwhile, an ongoing expansion of Hilton Head Island Airport—just minutes away—has tripled commercial jet service and offers daily flights to Charlotte, New York, Baltimore, and more.
“We have the lowest inventory of homes on the market that we've ever had, and we're attributing this to folks from New York, Baltimore, Richmond, Chicago, and Washington, D.C.," wanting to relocate, Kristian says. The community is doing as many as four new homeowner orientations a day. As of late September, just 37 of about 4,200 properties were on the market.
“A board's job, as fiduciary, is not to be kind—it's to enforce their documents."
Henry A. Goodman, an attorney with Marcus, Errico, Emmer & Brooks in Braintree, Mass., and a fellow in CAI's College of Community Association Lawyers, hasn't heard of many problems in the more than 4,000 Massachusetts, Rhode Island, and New Hampshire townhome and condominium communities his firm represents. But in June, he did have to write a letter to the owner of a Cape Cod condominium who was apparently advertising and selling clothing from her residence after her brick-and-mortar store was shuttered during the lockdown.
“This business was bringing in people who were parking in other people's spaces, and there were people traversing over the common areas to the seller's unit. (The visitors) could have tripped and fallen. There could have been liability issues," Goodman explains.
He says, even in tough times like these, it's a mistake for boards to look the other way if what someone is doing is a violation of rules designed to prevent packed parking areas, noxious conditions, excessive noise, and other things that might make another home unpleasant or impossible to live in.
During the pandemic, a board hypothetically may ask if it's OK for Mrs. Smith, an elderly woman who lost her husband and can't earn money, to make and print greeting cards. If she is selling them online and sending them via the mail, Goodman says that would be fine. If she is selling them out of her unit, and people are coming to buy those cards, Goodman's answer would be no.
“A board's job, as fiduciary, is not to be kind—it's to enforce their documents," says Goodman, adding that having large numbers of people come into a community also raises liability issues if residents get infected by COVID-19. “It may sound harsh, but the job of an attorney is to protect their client. And what's proper to do doesn't always mean advising the client to do the kindest thing."
Pamela Babcock is a writer and editor in the New York City area.
AS OF AUGUST, 24.3% of employed persons in the U.S. teleworked from home because of the pandemic, down from 26.4% in July, according to the U.S. Bureau of Labor Statistics. Because many often are pulling double duty with child care, some associations have seen an increase in garbage and recycling, as well as a jump in deliveries—packages, groceries, lunches, and dinners.
That's not surprising since more people are eating at home and shopping online. Naturally, more deliveries also mean more traffic.
Hampton Lake Community Association in Bluffton, S.C., saw a big spike in takeout food sales from Backwater Bill's, its on-site restaurant, after indoor dining was shuttered. Much was because so many were working from home while also supervising children.
Prior to the pandemic, the eatery was open for lunch Wednesday through Sunday and dinner on Friday and Saturday. Due to high demand for takeout after indoor dining was curtailed, it expanded its hours and began offering takeout for lunch and dinner Tuesday through Sunday.
“Takeout was very, very popular," says Fred Chitty, the association treasurer. Convenience was a big factor since busy residents could order online. To streamline the process, the food and beverage crew created a pared-down takeout menu with salads, sandwiches, and two entrees each day—kid-friendly comfort food such as meatloaf and mashed potatoes or pasta as well as a higher-end offering such as steak and lobster.
While the association initially worried the pandemic would spell a slump in food and beverage revenue because the restaurant and bar were closed for indoor dining much of the time, Chitty says member support for takeout was “giant," and food revenue for the second quarter was 56% higher than projected.
In downtown Detroit, high-rise condominium properties that have a community-based mail room have found them more packed with packages. William Z. Kolobaric, a condominium and real estate attorney with Hirzel Law in Farmington, Mich., notes that a couple have had to expand their facilities to accommodate the increase in deliveries.
Kolobaric adds that COVID-19 also has made interior repair work in condominiums—things like leak repairs and smoke detector checks—more difficult to schedule. Some has been due to concerns about potentially being exposed to the virus, but Kolobaric says the bulk has involved “a surprising unwillingness" to schedule a convenient time to do the work during the day while people are "stuck" at home. “They do not want to be 'bothered' while they are at home, even though the repair work is for their benefit," he says. —P.B.
CAI ENCOURAGES community associations to adopt use restrictions pertaining to home-based businesses that are reasonable and flexible and applied uniformly according to objective criteria that are set forth in the governing documents or rules and regul ations.
»View CAI's public policy on home-based businesses in community associations.
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