All Home Owners Associations (“HOAs”) and their home owner members should be aware of a recent High Court judgment addressing the knotty problem of a HOA’s powers to bar an owner from running a home-based business.
The Case: Municipal Zoning v HOA Rules
- A home owner in such a complex was bound (via both her purchase agreement and the title deeds) by a HOA’s constitution and conduct rules.
- She had for many years conducted a home business in the form of a hair salon from her house.
- The HOA’s constitution and its conduct rules prohibited use of homes for anything other than residential purposes, unless authorised to do so by special resolution.
- The HOA, after the home owner breached a written undertaking to cease business, applied to the High Court to interdict her from continuing.
- The home owner’s main argument was that her home business was permitted by the local zoning regulations, which did indeed permit certain small scale non-residential activities. The HOA, she argued, had no right to override these zoning scheme provisions by prohibiting all non-residential use.
- The original Court found for the home owner, but on appeal to a “Full Bench” of the Court, the interdict was granted. The Court held that “…..there is nothing contained in our law which prevents a property owner from agreeing to a limitation of its rights…..” and the individual home owners had, by agreement, forfeited their right to use their land for anything but residential purposes. Moreover the HOA had not purported to change the zoning scheme and was “well within its rights to seek to preserve the residential character of the development”.
- The home owner was accordingly interdicted from continuing with her hair salon business and, to rub salt into her wounds, must pay the HOA’s costs on the attorney and client scale.
In a nutshell
Home Owners Associations: Check your constitution and conduct rules to ensure that you have adequate powers to preserve the residential character of your development. Take advice in doubt!
Home Owners: If you want to run a home business, check both the local zoning regulations and your HOA’s constitution and conduct rules before you open your doors. Again, take advice in doubt!