Let’s Get Down to Businesses

By Senior & Founding Partner Neal McCulloh

Senior & Founding Partner Neal McCulloh

Issues with the General Business & Commercial Operation Prohibitions in associations’ Governing Documents 

A provision which prohibits all Business and Commercial Operations may prove problematic, as it may seek to prohibit all business and commercial activities (i.e., operations) within a community. Please appreciate that prohibiting business and commercial activities within communities has become more problematic as technology has advanced. In today’s world, countless individuals perform some level of business or commercial activity from their homes. How many of us use our phones and computers on business activities from our homes? Given this fact, do you really want to stop all such activities, or do you only want the outward manifestation of such business and commercial activities to cease? By way of example, while you may want to prohibit an auto repair shop operating within your community, you probably do not want to prohibit someone from using a phone for a business. 

Given the above, communities probably want to treat levels and/or types of business and commercial activities differently. However, this means that the governing documents should expressly and specifically be drafted to address such nuances. In fact, those associations whose governing documents simply prohibit all business and commercial operations ostensibly are somewhat problematic, as those associations probably will only enforce the limitation with respect to those residents whose business and/or commercial activities manifest, or potentially only significantly manifest, themselves outside of the home.[1] However, such inconsistent treatment is not only problematic, but jeopardizes the association’s ability to prohibit the more offensive and/or egregious business and commercial activities. Please understand that such limited enforcement is arguably selective, unequal and inequitable. Moreover, such unequal enforcement provides those residents who are committing the more egregious business and commercial activities with potential defense(s) to use against the association’s enforcement efforts and/or action(s). By way of example, such individuals may endeavor to assert the defenses of selective enforcement, waiver and estoppel. Please remember, the association needs to treat each of its residents equally. As such, an issue arises whether enforcement should be blind with respect to the level of violation. Of course, in today’s world, especially with the advent of phones, computers, etc., perfectly-equal treatment may be impractical and unrealistic, which is why associations suffering from these types of dilemmas (e.g., poorly drafted and/or outdated documents) should consider implementing proper amendments to address such issues.  In fact, associations should seriously consider amending their documents to preserve their enforcement rights and to protect the community from potential future violators whose violations are far more egregious than those being committed currently. 



[1] Note - by way of an example, parking of tow trucks and eighteen-wheelers, numerous business deliveries, the parking of numerous client vehicles everywhere, etc.