Dav Cares In HOAs

Valerie,

I believe most assn's have a "no business" rule. Some have rules regarding what type businesses shall be allowed. In most instances traffic and noise are a factor. I can understand that running a day-care business could cause both of these factors to come into play. I'll venture to say that the majority of people complaining are those who either want to run or use the day care business. Am I right? If the majority of your members are OK with the rule then don't let the small number of complainers concern you. However if the majority don't like the rule then perhaps it should be put to a vote to amend the CCRs to have it deleted. I've always been a staunch proponent of majority rule.

In California, day care centers are allowed in Associations.

Day Care Centers
QUESTION: Our CC&Rs ban any commercial use of property but one of our residents is running a day care business out of her condominium. We sent her a letter demanding she cease and she responded that under California law we cannot stop her from running this business. Is this true?

ANSWER: She is correct. The California legislature wants family day care homes for children to be situated in normal residential surroundings so as to give children the same home environment as provided in a traditional home setting. Health & Safety Code §1597.40(a)

To that end, the legislature declared that care centers as residential, single-family homes (H&S §1597.40(a)) and voided every restriction that directly, or indirectly limits the acquisition, use, or occupancy of property for a family day care home for children. H&S §1597.40(c). A "day care home" is defined as one that regularly provides care, protection, and supervision for 14 or fewer children for periods of less than 24 hours per day.” H&S §1596.78(a).

Reasonable Regulations for Day Care Centers. Although associations cannot prohibit day care centers, they may adopt reasonable regulations that include:

Licensing. The homeowner or tenant operator must obtain proper licensing. Different conditions and requirements are imposed by California law for small family and large family day care homes. H&S §§1597.44-46; 1597.465. Associations should check both the validity and type of license with the local Community Care Licensing Division Child Care Office.

Local & State Laws. Day care operators must comply with all local and state laws regulating the licensing and operations of a day care center. The “Manual of Policies and Procedures” sets forth the regulations and operating procedures of a licensed family day care home.

Insurance or Affidavits. Operators must maintain (1) liability insurance in the amount of at least $100,000 per occurrence and $300,000 aggregate, or a bond in the aggregate amount of $300,000; or (2) affidavits signed by each parent with a child enrolled in the center that states that the parent knows that the day care center does not carry insurance or a bond. If there is insurance or a bond, the association may require that it be named as an additional insured, provided that the association pays any additional premium assessed for this coverage. H&S §1597.531 The association may also obtain insurance.

Indemnification. Day care operators must indemnify, defend, and hold the association harmless for any liability arising out of the operation of the day care facility.

Supervise Children. Day care operators must supervise children when they are on the premises, including their use of the association's recreational facilities.

Tim,

You said: "The problem is that most Associations "no business" policy is too general and simply says "no business may be operated from the lot". If this is the case with your Association, enforcing it on one requires that you enforce it on others. Therefore, if someone is operating a consulting business, graphic design work or an internet business from their home, you need to shut those down as well."

Even if that is the case, the BOD has the ability to interpret a CCR restriction. The "no business" restriction can be interpreted to only mean a mfg business and those businesses that cause noise or compound parking problems and does not apply to other types of home-based businesses.

ValerieF1,

Can you tell us how you did it?

Gathering evidence, proof, etc.?

We could all learn from it.

TNT, Sam

Tim.

The reason I asked Valerie the ? above is because I wanted to see how it was proven to be a business.

What if, in another case, it was a barter or "ring" type situation? I watch your kids, you style my hair, or detail my car, or clean my blinds, etc.

Is that a "business"? I don't know.

The notion of identifying all businesses "at home" in a community is unrealistic. There also has to be some "damage done" to the community as well to justify the expense to the assn.

Joe admits to you he is selling cars on the WWW. He coordinates sellers with buyers for a comimssion. He has no traffic or other "wear & tear" on common property because the cars are never in the community. They may not be in the same state or even in the U.S. (import/export).

What do you plan to do?

How do you prove it without expending lots of assn. money?

What is the "damage" to the community to justify it.

Suresh,

I agree. Any guideline should be considered on what is the damage to the community. This is why I said that most guidelines that deal with no business are badly written because they are too general.

I wish I had better wording to offer. Alas, my HOA also has the generalized "no business" guideline. Past practice has been to not enforce it (as we have not had a business create undo traffic or excessive use of common ares). However, if we had a business that did require to enforce the guideline, I would be one shouting that if we are enforcing one, we must enforce all (which would affect my next door neighbor, a board member and, oh yeah, our own bookkeeper who is operating from her home).

If someone has an example of a better guideline, I would love to get a copy to use as a basis for amending our documents.

Tim

For what it’s worth, here’s how our Declarant tackled it:

The restriction above to the use of any unit as a single residence shall not prohibit the conduct of a “home occupation” or profess-ion carried on by residents permitted to reside on the premises under Section 7.1 of this Declaration and in connection with which (a) there is used no sign or display that will indicate from the exterior that the building is being utilized in whole or in part for any purpose other than that of a residential dwelling, (b) there is no commodity sold, or services dispenses upon the premises, (c) no person is employed other than residents permitted to reside in the unit under Section 7.1.A (1) above, and (d) no mechanical or electrical equipment is used except such as is permissible for and is customarily found in purely domestic or household premises for the family residing therein. A professional person may use his residence for infrequent consultation, emergency treatment, or performance of occasional or emergency religious rites, but not for the general practice of his profession. Permitted home occupations shall not include barber shops, beauty shops, shoe or hat repair shops, tailoring shops or any type of pick-up station or similar commercial activities but the recitation of these particular exclusions shall not be deemed to constitute authorization for conduct of other businesses or enterprises which are precluded by this or other sections of this Declaration.

Sure, every HOA has at least on person everybody would swear was possessed.

Glen,

Your CCR restriction is pretty concise except that it fails to mentions two, IMO, very important factors: noise and traffic congestion.

Very good, Roger. However, again the parking issue has not been addressed. A Day Care business, for instance, could pose a real traffic problem with parents dropping off and picking up their children.

Valerie,

In your original post, you wrote:

"Our association is currently under fire for having a "no business" policy and shutting down 3 day cares. Am wondering if any other associations are having or have had this problem and how it was handled. We are a group of 850 homes and it is amazing how much trouble a small group of people can cause for everyone."

The only roughly similar situation I am familiar with involved Parkside Community Association Inc. in the state of Maryland in 2008. In that case, Parkside Community Association at first had a section in its CC&Rs specifically PERMITTING "Family Day Care Homes." One resident's abuse of the right granted by the CC&Rs so outraged other residents in the association that they demanded that the Parkside CC&Rs be amended to disallow such day care centers altogether. The original reading of the relevant section of the Parkside CC&Rs and the proposed amended reading are available online (http://tinyurl.com/yk9u3mm). The entire document containing the original reading and the amended reading is worth perusing because it deals with numerous issues raised by various posters who have hitherto responded to your original post.

Parkside ultimately amended its CC&Rs as proposed. The woman operating the previously offensive day care center in turn took her case to a Maryland Commission on Common Ownership Communities. She not only lost, but also had to pay a sizable chunk of the defendant's attorney fees. The commission's detailed report is interesting reading, and its "decision" and "order" will likely surprise (or perhaps, even appall) some readers. The full report is available online (http://tinyurl.com/ydftgan).

The relevant laws of your own state may not, however, be similar to those of Maryland; and you'll want to become familiar with Washington day-care-center laws before proceeding further.

We faced this same issue concerning Daycare and lumped in other businesses. Our docs broadly states something like: there will not be any business except for professional such as lawyers, bookeepers, etc with no employees.

Maryland has an HOA law that addresses daycare. It also has some laws that address low impact businesses in residential areas.

The lawyers opinion was that our covenant was too broad and would not hold up. Even though the Maryland HOA act allows for daycare the Association could place enforceable restrict that would ban them. The docs would have to be amended an sent out to all owners for a vote. This would have to follow the steps laid out in the governing docs for amended them.

Basically your docs have to be specific and adopted by a legal quorum of members.

Interestingly enough, our association is dealing with this exact issue right now.

A homeowner is running an at-home day care center, which is a violation of our deed restrictions concerning operating a business from the lot.

Our association has adopted the policy of not policing for violations, but rather acting on each and every complaint of an alleged violation.

This policy has served us well through several court cases, each of which we won.

Now going back to the day care, we received notification that the resident was running a day care.

We investigated the allegation and have board members who have witnessed the daily drop offs, have validation from the state day-care licensing organization that this resident has applied for and receives annual licensing, and have validation regarding advertising that this resident has done to obtain more business.

We then sent the resident a notice to cease the operation of the day care, cited the CC&R against the running of businesses, and gave her what we considered a very generous 90 days to terminate the operation. We recognized that it can take the people who use her services a while to find alternate day care providers, and we did not want to unfairly punish those people.

She did not cease her operation and instead solicited several residents to "plead" her case: she's a nice woman, the kids aren't a problem, she needs the money, etc etc etc"

She then tried to request that we allow her to continue her operation until she can move. Never mind that she actually admitted that she knew it was against the rules when she moved into the development and had been operating the day care from the moment she moved in, which was almost 2 years prior to us receiving notification of the violation.

We could not give her such an accommodation. At the same time we received notice of her business, we received notice of a gentleman using another lot to operate a lawn care business, complete with deuce-and-a-half trucks, trailers, 20 or 30 wheel barrows stacked on his porch, etc.

How could we successfully enforce against THAT "home" business, once we are made aware of it, and NOT against HERS by allowing her an indefinite "grace" period till she sells her house? Short answer, we could not. Both had to receive the same treatment.

After we sent her the second notice, she continued the day care.

She just received the next step in the process, the letter for the attorney informing her of the lawsuit we will be filing if she doesn't cease operation within 30 days.

The 30 days is almost up.

By the way, the lawn care business guy immediately moved his operation.

The key is that you have to be consistent, you have to enforce to the full extent allowed in your governing documents, even if that means taking it to court. If you have well-documented your consistent enforcement efforts, and your good-faith effort to encourage compliance, then you should have no problem in court.