Is Home Day Care an Exception to a Home Business Ban?

October 19, 2015
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Q: As the manager of a condo building, I recently discovered that a member has been operating a day care for profit in her unit. There have been a few complaints from other members about noise and an increased number of visitors to the building—mostly from pick-ups and drop-offs of children. I checked our governing documents and home businesses are banned. But some of the board members I talked to about this think that it’s unclear whether a day care is a typical home business for our purposes. We don’t want to spark a lawsuit by demanding the member give up her business unless we’re certain that we can prohibit it. What’s the likelihood that we’ll be able to enforce the ban?

A: That depends on several factors including your state law and the legal precedents that have been set in your state, as well as the specific language used in your governing documents. Your first move should be to consult the condominium’s attorney, who can advise you based on your specific circumstance. But be aware that in some states courts have been lenient about day cares in residential condominium buildings—carving out exceptions for this particular type of business even when home businesses have been banned by governing documents.

In a recent New York case, a housing court ruled that a provision in a co-op’s proprietary lease banning child care centers from the building is unenforceable because the state law creates a “strong public policy” favoring day care. There, it was determined that a co-op complex shareholder couldn’t be evicted for operating a group child care center in her unit. Initially, the co-op demanded that the shareholder stop running her day care, arguing that the day care violated the proprietary lease that specified that the building’s units were to be only residential in nature. Each party—the shareholder and the co-op—asked a court for a judgment in its favor without a trial.

The court ruled in favor of the shareholder. The judge noted that courts typically enforce provisions restricting residential premises to residential use, but she followed precedent set by other courts that have made an exception to such restrictions based upon public policy considerations. (While past cases dealt with condominiums, the court decided that they also could be applied to co-ops.)

The court ultimately ruled that the use of a licensed day care in residential premises doesn’t violate a substantial obligation of the tenancy in the case of “group family day care homes,” defined by state law as day care facilities run out of private homes.

The court pointed out that “both condominium owners and cooperators relinquish a degree of freedom and rights for the greater good of the building,” but public policy considerations preempt restrictive covenants in condominiums, and courts have applied public policy considerations to preempt restrictive covenants in cooperatives in past cases [Waldo Gardens v. Burns, June 2014].