The home based business issue again

Hi, this is my first post. I'm a new board member for the first time ever and here's a situation our HOA is up against that has me a bit concerned.

Our 3 member board has recently sent a letter to a homeowner who is running a home based business (some kind of consulting business) asking them to cease operations. Our CC&Rs state that home businesses are not allowed provided they do not have customers visiting, noise, visibility from the street, etc.

The other 2 board members overruled me and are willing to take the homeowner to court if necessary. In particular one of the others seems to be eager to fight this out. I argued that we should let it go because the homeowner stated no customers are coming and they are not noisy nor are they advertising or posting signage etc. They are strictly using a home office and I see no evidence to the contrary. We've had no complaints from anyone else. I told the other members that we may not have a good case if we go down this path because of the language of our CC&Rs. Plus the expenses we would incur should we not prevail would be a waste of money. The others don't see it that way. In fact in their letter to the homeowner they purposely took out the language regarding the exceptions in the section where they quoted the rules. So far the homeowner has not responded but no matter what they seem determined to double down and dig in for a fight if necessary whether it be fines or court or whatever.

Am I off base here? Do we really stand a chance of winning a potential legal fight over this issue?

Nate

Welcome to the forum, Nate.

You wrote: "Our CC&Rs state that home businesses are not allowed provided they do not have customers visiting, noise, visibility from the street, etc." I think that the "not" was a typo, yes?

Our CC&Rs (high rise condos) also permit exactly what yours do and even add some kind handicrafts. On what grounds do the other two directors believe the owner is violation your CC&Rs? What language do they use in their letter to him?

If this owner does not comply, your board will have to go through a hearing process per CA law and your own documents. Do they really want to do that? And doesn't your HOA have more important matters to deal with (IMO) than harassing an owner?

NpS makes sense, see what your zoning laws allow and write a well-reason brief agenda item on the topic as it relates to this owner.

I think you should be concerned especially if this goes too far and the owner sues your HOA. So in the meantime, make sure your votes are recorded in the minutes to show you do knot believe this owner is in violation of your governing documents.

oops: require should be required

Nate,

Your association has zero chance of winning a legal fight over this issue. Once it becomes known to the court that the board deliberately omitted those provisions in the CC&R's that would permit the business, the court could easily conclude that this was a personal vendetta and hold the directors personally liable for all costs. That means if you remain silent your kids' college fund may end up in some lawyer's pocket. (If your association has D&O insurance, that will provide you with a defense counsel but it will not indemnify against deliberate acts.)

You need to distance yourself from your fellow board members. Start by sending your own letter stating the full text of the CC&R's and indicating that you did not approve of the letter sent by the other two board members. Sign it as Nate K, Member, Board of Directors. Do whatever you can to have your letter put into the official records but, above all else, keep a copy for yourself. This is not going to win you the respect and admiration of your fellow board members. Screw them - they are willing to throw themselves under the bus and drag you along with them. They are not your friends. You owe them no loyalty.

BTW, a number of years ago I was being harassed by a jerk who lived in another state. He did some digging on me and my wife. Then he filed an anonymous complaint with the city zoning that we were running two businesses from our home. I had a consulting corporation and our home was listed as the business office as well as the place to find the statutory agent. I had a business phone listed at our address. My wife had a personal catering business, also with business phone listing. The city investigated and determined that we had violated no ordinances. The key test is whether there is any significant business activity, such as signs, an unusually high volume of deliveries, or customers.

If you have concerns as a Director about some material Board decision - or even about some voodoo stuck falsely into Board or draft AGM Minutes - insist that your dissent be recorded within the Board Minutes.

As Larry B13, noted noses may get out of joint. They may think you are Satan, but maybe you need to get out.

The Aussies got it straight several years ago in the ( non-HOA ) Hardie judgment when courts ruled that a Corporation's Board of Directors would be held to a materially misleading prospectus that induced lots of outsider investors to make a buy/sell decision that was catastrophic. Insiders avoided the carnage of course. Individual directors tried to declare were not there or had voted unrecorded dissents. Bogus Board Minutes were hurled around . . . .

If your insistence on recorded dissent is ignored, maybe time to hit the road.

Larry & Richard hit it on the button. Who ever feels like fighting over old Minutes ?

Hardie showed that the Minutes can get voodoo-doctored anytime especially fighting claims, fines and jailtime. Rarely do individual Directors really have enough at stake criminally nor civilly for Minutes to eventually hit forensic reconstruction. Recorded dissent under your own control/confirmed by e-mails too, whatever, is darn good idea.

Serving unwilling or absent recipients : actually using multiple service methods, all displayed concurrently onto the original document & duplicates beside addressee eg "copy served by US postal electronic tracking # _____ ; personal service on ____ , by text /email on _____ etc . . .

record a lien against the property

get a court order to 'cease and desist'

hire an attorney

imbibe some testosterone

DIRECT, since y'all are directors

simple

but actual work

Barbara

If she is breaking local/county laws then get them after her first before getting the BOD involved.

My documents say what order money is applied to, so when the violator/homeowner sends in the quarterly dues, first fines are paid per our docs. This means the person is short on dues payment and that becomes a more serious and enforceable issue. Do your documents say anything similar?

Wow I want to thank everyone I didn't expect to see so many replies so soon.

Sorry if I had a typo in my initial post. Our CC&Rs state no businesses but home business is not precluded as long as certain conditions are met. Our community is only a few years old so we definitely do not have an archaic rule in place. It definitely seems to allow for a quiet home based business. I know of a few people in the community who either have businesses or work from home.

@ KerryL1 - I will look into the zoning issue though I believe our city readily issues home occupation permits and defers to an HOA's CC&Rs if there is any dispute. Based on the wording of our CC&Rs I bet they would not find a violation.

@ BobD4 - Thank you other than us knowing about the business existing I don't believe we can truly show any damages and no evidence has been brought before the board.

@ LarryB13 - That is sound advice. I will attempt to write a letter distancing myself from this particular action.

@ RichardP13 - For some reason when the others on the board wrote the letter they only included the first half of the rule. I don't know why but when I brought up the rest of the language and why we weren't including it one of the others basically reacted in a way to say no we're not going to be doing that. After reading the other replies here I am worried that this homeowner's lawyer would have a field day with us in court, should it come to that.

@ BarbaraM21 - Dont worry about hijacking the thread its no problem. Applying your situation to my own community I would certainly see that as a violation. Our CC&Rs say no customers, no advertising etc. I would have no problem with our letters if that was our homeowner in question.