Facts

You are an owner-occupant within an association. You operate a business office out of your residence. The CC&R's provide that your residence can only be used for residential purposes. The association notifies you that you must discontinue your business because it violates the residential use restriction in the CC&R's. Can the association force you to discontinue your business?

Legal Analysis

Most CC&R's restrict the use of a residence to a residential purpose. However, CC&R's vary as to how "residential" is defined. Some prohibit all commercial activity. Others will allow some types of home occupation businesses provided certain pre-conditions are met. Therefore, the first step must be a careful reading of the CC&R's, particularly as it relates to the definition of residential use.

The next step is an analysis of the applicable case law and statutory authorities. Most of the case law in this area is developed in connection with public agencies, such as cities or counties, prohibiting or permitting some type of commercial activity in an R-1 residential zone. These cases are helpful but not necessarily controlling in the context of homeowners associations. The following cases are illustrative of public agency cases: A part-time beauty parlor was held to violate the residential use restriction. Biagini v. Hyde (1970) 3 Cal. App. 3d 877. However, many other home occupations have been permitted, including the writing of a syndicated column (City of Beverly Hills v. Brady (1950) 34 Cal. 2d 854), practicing law (County of Butte v. Bach (1985) 172 Cal. App. 3d 848), and conducting a real estate business (Jones v. Robertson (1947) 79 Cal. App. 2d 813).

It may be helpful for you to review the public agency's zoning ordinance regarding home based business in an R-1 zone.

There are several types of businesses that are statutorily permitted in an R-1 zone, as well as in an association with a residential use restriction. One such business is a residential care facility comprising 6 or fewer persons (Health & Safety Code sections 1500-1567.8.) This applies to facilities for the physically disabled, mentally impaired, abused and neglected children. See also, the Federal Fair Housing Act (42 U.S.C. 3601-3631.) Another protected facility is a family day care home. This consists of 14 or fewer children in a providers home for less than 24 hours. These uses cannot be prohibited. Health & Safety Code section 1597.40(c); Barrett v. Dawson (1998) 61 Cal. App. 4th 1048; Broadmoor San Clemente Homeowners Association v. Nelson (1994) 25 Cal. App. 4th 1.

Efforts to restrict the number of unrelated persons living in a residence have generally been unsuccessful. In City of Santa Barbara v. Adamson (1980) 27 Cal. 3d 123, the Supreme Court held that a city ordinance that did not restrict the number of related persons living within a residence, but restricted the number of unrelated persons living in a residence to 5, was invalid. Similarly, in College Area Renters and Landlord Association v. City of San Diego (1996) 43 Cal. App. 4th 677, there was a city limit on the number of persons over 18 years of age living in a non-owner occupied residence. This limitation was held to be invalid. In both of these cases, the restrictions were imposed by a public agency. While persuasive, these cases were not controlling in the context of a homeowners association.

The author has been involved in three noteworthy cases that involve the issue of the residential use restriction within an association.

In the first case, a film producer who was an owner/occupant in an upscale association wished to produce a "reality show" for a TV series based on the lives of persons living within the association. The show was based on interviews conducted with the residents and discussions between the residents and their family members and neighbors. The association objected to this filming because by filming the common areas such as the club house, the golf course and the entrance way, the identity of the association would be readily determined by persons familiar with the community and would caste the association in a negative fashion. The association contended that the filming was contrary to the residential use requirement specified in the CC&R's. The film producer, who was represented by the undersigned, contended that the filming was not a violation of the residential use restriction. The association threatened to but did not initiate a court action to block the filming and/or production. The show was produced and it was popularly received on television.

In the second case, a resident within a gated senior association was conducting a school in her residence. Somewhere between 10 to 20 children arrived by car who were taught and/or tutored at the owner's residence by the owner. The association believed that this was a non-residential use contrary to the CC&R's. The association filed an action against the owner. The case is currently pending and a trial date has not yet been set.

In the third case, an owner remodeled his two-story residence, so that the only access to his second story was by an outside stairway. On the second story, there were three separate living units. The owner had effectively converted his single family residence into a four-plex. The owner discontinued this use when the association threatened enforcement action based on Hill v. Ghamaty (2006) 143 Cal. App. 4th 1156.

Conclusion

Turning to the case of a home-based business, some of the issues the court will consider are: (a) the number of patients, vendors and employees visiting on a daily basis, (b) the number of vehicles and the duration of stay of the vehicles and (c) the adverse impact on the neighbors. Based on the above referenced cases, the issue is whether a your business is more like a beauty parlor or more like an attorney's office or a real estate office. The answer may depend on the volume of business activity and whether the association has permitted any other home-based businesses. There is no clear answer.

Barry A. Ross is a member of the Real Estate Section and the Business Litigation Section of the Orange County Bar Association. Mr. Ross represents property owners in disputes with their homeowners associations. Mr. Ross can be reached at 949-727-0977 or http://www.RossRealEstateLaw.com