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The Neighborhood Bully

Homeowners’ Associations Can Ban Home Businesses
By Jan Norman

More than half of new businesses in the U.S. start at home, reports the U.S. Census Bureau.

But before you order business cards for your startup or relocate your home business to a new community, check whether home businesses are allowed in the neighborhood.

And don’t just check city, county, state or federal regulations. Your biggest obstacle might be your homeowners’ association. Many homeowners’ associations completely prohibit any business in the name of protecting the residential nature of the neighborhood.

Why, they can’t do that, you protest.

Yes they can, says attorney Brett Weiss in Olney, Md. “There are no restrictions on what homeowners’ associations can require. It’s a private contract that every resident agrees to comply with.”

If you don’t want to comply, don’t buy in that community.

Prohibiting home businesses in residential neighborhoods didn’t cause a big conflict until technology and the Internet made it possible to run substantial businesses at home. Now, the U.S. boasts about 13 million home-based businesses, reports the U.S. Small Business Administration.

The sheer numbers suggest that home businesses exist in every community, regardless of what the homeowners’ association rules state.

But beware. “Many still prohibit home-based businesses because they used legalese boilerplate in writing their covenants, conditions and restrictions,” Weiss says.

You’re not helpless against such old legal language. If you want to run a business in your home, but the covenants, conditions and restrictions say no, try these tactics to sway your homeowners’ association.

1. Change The Rules
Talk to members of your homeowners’ association board about updating the rules to recognize reality while protecting the neighborhood.

Home businesses range from no impact, such as a copywriting service, to major impact, such as a foundry. Seek new rules that allow low-impact businesses, such as those with few or no employees and no exterior evidence of the business.

2. Consider Reality
Investigate how the association board has enforced the home business prohibition, Weiss says. Are other homeowners operating businesses from their houses?

“If everyone is doing it, and no one is enforcing it, then you can probably stop it from being enforced at all,” he says. “If the president of the homeowners’ association has been running a home-based business … The association has to show that it treats everyone the same.”

3. Work With Neighbors
Find out your neighbors’ concerns about noise, traffic and odors, says Pam Brown, consumer sciences specialist at the Texas Cooperative Extension in College Station, Texas. “Your business must be viewed by neighbors as a beneficial part of the neighborhood,” she says. “Try to find a balance.”

4. Stress The Benefit
Home-based business bans evolved from a negative view of the impact on the neighborhood, so emphasize to the association board the value of having home business owners around to discourage daytime burglaries, Weiss suggests.

Protect Your Home Business

Don’t depend on your homeowners’ insurance to cover your home-based business. Check out the NASE Home Office Protection Plan – offered at no additional cost to NASE Premier Resource Members.

You’re protected in case of fire and lightning, theft and burglary, ice and snow, as well as other events. You get coverage for up to:

  • $7,500 worth of equipment

  • $20,000 worth of business liability coverage at your residence

  • $1,500 for temporary relocation of your home business


Writer Jan Norman’s brief experience with a homeowners’ association 30 years ago persuaded her that living in an unassociated neighborhood is the way to go. Norman is the author of “What No One Ever Tells You About Franchising” (Kaplan Publishing, 2006).

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