Business Law Civil Litigation Legal Topics Real Property Law

Checklist for Disputes Over a Neighbor’s Home Business

home businesses may cause disputes with neighborsA home may be a person’s castle, but it can’t always be his or her office. More home-based businesses (including short-term rentals and home food production) means more neighbor disputes. Here’s a look at what constitutes a home business and a checklist to review whenever you’re asked to consider a dispute involving one.

The digital age is spawning a greater tolerance for home-based businesses because there are many tools that not only facilitate working from the home but also serve to reduce some of the noticeable impacts on neighborhoods that may have existed before. What may have been considered a commercial enterprise inconsistent with the residential ambiance of a neighborhood years ago may now be more acceptable.

When you’re advising a client who’s running a home business or one trying to stop a neighbor’s operation of a home business, it’s important to understand how the court’s have defined “home business.”

To begin with, a business is “any activity engaged in by any person or caused to be engaged in by him with the object of gain, benefit or advantage, either direct or indirect.” Union League Club v Johnson (1941) 18 C2d 275, quoting the 1935 amendment of the Retail Sales Tax Act (Stats 1935, p 1256). The activity need not turn a profit.

A home business is one that:

  • Is engaged in with the object of gain, benefit, or advantage;
  • Has a continuity of service;
  • Is more than merely incidental to the residential use of the premises; and
  • Does not interfere with the character of the home or neighborhood.

Regardless of legal definitions, practically speaking, a client who operates a business from his or her home would like to conduct it without interference from neighbors. On the other hand, homeowners seek to protect the residential character of their neighborhoods and protect their property values by limiting the impacts of neighborhood businesses.

Here’s a checklist for counsel representing either side of a home business dispute:

__  Review all relevant zoning ordinances and identify when these zoning ordinances were enacted

__  Visit the local county recorder’s office to obtain copies of any covenants, conditions, and restrictions or other deed restrictions

__  Obtain copies of relevant homeowners association (HOA) documents or the client’s lease if a rental

__  Investigate local attitudes toward similar types of neighborhood businesses

__  Accumulate verifiable data on the imposition the business places on the neighborhood and counsel the client on the risks involved

__  Check on commercial activity that’s already allowed in the locale

Keep in mind that it may be possible to avoid a dispute by involving neighbors in the start-up process.

For discussion of the practical and legal issues involved with home businesses and how to handle disputes, turn to CEB’s Neighbor Disputes: Law and Litigation, chap 12. On home business restrictions in common interest communities, check out Advising California Common Interest Communities §6.33.

Other CEBblog™ posts you may find interesting:

© The Regents of the University of California, 2018. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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