New Condo Trends Welcome Home-Based Businesses
Peter G. Miller, OurBroker®

Over the past 25 years homeowner associations have emerged as a new form of "government" -- what else can you call an entity that has the power to determine the color of your front door and fine you for infractions?

Community associations provide the structure needed to run condos, co-ops, and planned unit developments (PUDs) which house some 42 million people nationwide. There is much justification for such associations and in large measure those associations which govern least enhance unit values.

But homeowner associations can also be intrusive and arbitrary. Regulations prohibiting the display of U.S. flags or limiting the right of owners to post "for sale" signs are sure fodder for debate, lawsuits, and counter-suits.

Comes now the Community Associations Institute with a timely idea: Revise association regulations to allow home-based businesses.

CAI points out that while roughly 100,000 home based businesses are created each month, "many community associations are governed by covenants that restrict or ban home-based businesses. The number of conflicts between homeowners operating home-based businesses and association boards seeking to enforce covenants is increasing and needs to be addressed."

In other words, times are changing.

The argument is not that someone should be allowed to operate a forge, keep venomous animals, or store nuclear fuel in a townhouse or condo unit, but rather that no-impact business activities should be allowed automatically.

By "no impact," I mean businesses that do not require structural changes, clog parking lots, vent fumes or loud noise, or feature a steady stream of client visits. Most home businesses today consist of a few desks and computers -- they readily fit "no impact" definitions and such on-site activities should be encouraged.

Why?

• Because people working at home represent additional security for all property owners if only because there are additional eyes and ears in the "neighborhood."

• Because having a home-based business represents the opportunity to generate additional income -- and more income means fewer unpaid co-op fees and condo bills.

• Because, at bottom, how people use their homes is their business. It's a private matter to the extent that zoning rules and safety regulations are not breached.

"The majority of community associations operate under covenants that have never been updated or revised, despite dramatic cultural changes that have affected how we live and work," says Marvin J.Nodiff, an attorney and chair of CAI's Public Policy Committee.

"Association boards need to respond by considering whether existing bans on home businesses should be revised or retired," says Nodiff.

Agreed.

Question Of The Week

Q I bought a home with a friend and now our friendship is at an end. How do I get off the mortgage?

A Most likely you have two substantial issues.

First, your name is on the mortgage because you co-signed the loan. The lender might not have made the loan without the support of your credit history and income. The lender wants you to remain on the loan in case payments aren't made -- in most states you are likely responsible for all unpaid debt and costs not covered in a foreclosure.

So, to get off the mortgage the loan must be refinanced or the lender must "release" you from the debt. Since there is little benefit to the lender from a release such a waiver is unlikely -- unless your co-owner can qualify independently, the house has substantial equity, etc.

In addition to the mortgage, it is probable that you are also on the deed as a co-owner. Do not remove your name from the title without first speaking with a local attorney -- you could lose valuable rights, equity, and your ability to force a refinance.

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Mr. Miller welcomes your questions, comments, and news releases. All correspondence shall become the property of Mr. Miller upon receipt. He can be reached by e-mail at OurBroker.

Editorial Notice: Content on this page reflects the opinions of Mr. Miller only and not necessarily the views of any publication, organization or website owner.

Published: June 9, 1998

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