Can a Renter Run a Business Out of My Investment Property?

Mar 25, 2020 12:00:00 AM / by Hignell Property Management Team

homebased businessProperty owners have a lot to deal with when it comes to residents renting their property. The desire of every property owner is to have that one family that causes no trouble and actually takes care of the property. But what happens when the resident decides that they are going to run a business out of the home? The property owner may feel that there's nothing that they can do, but the truth is that there are things that can be done to keep it from taking place.

It's not illegal for a resident to run a business out of a rental home. But the issue does raise some major concerns for the property owner. These concerns magnify if there are customers coming and going on the property.

Check if the business is in compliance

As the property owner you will want to make sure that the business complies with all city and county zoning laws. The last thing you need to have happen is for a fine to show up in your mailbox because of a zoning violation. If the business violates the zoning laws, you have the right to demand for it to cease. You may also find that working with the resident to find a solution to the issue is better than making such demands. But if the issue cannot be resolved, then the business will have to relocate to another facility.

Pass risk onto the resident

You may find that it is easier to cover your property and your exposure with an insurance policy. This type of policy will have to be bought by the resident that is residing in your investment property. The policy will cover any liability issues that can happen as a result of the business being run out of the home. As the owner of the residence, you are ultimately responsible for any accidents or injuries that could take place. It is best to pass that risk along to the business owner.

Update your lease agreement

You always have the option of restricting what takes place on your investment property. These kinds of restrictions will have to be spelled out in the lease agreement and worded correctly in the rental contract. It would be best to have a lawyer draw up the documents, so you know that there is no legal violations being overlooked. Once the contract is signed and in force, you would have the legal authority to evict the resident for lease violations. It would also provide you with the means of getting the person to stop transacting business out of your investment property.

Set expectations before the resident moves in

You may also find that working with the resident is better than making demands. Before the person ever moves into the home, you may provide them with ideas of a homebased business that is acceptable by the city and county and by yourself. The last thing you will want to have happen is for legal action to be taken against you for the actions of another person renting your investment property. Simple precautions can be put in place to protect you from any legal action by an outside party.

Know the laws

There are a number of laws that prohibit certain businesses from being homebased. If you find that your rental home is being used as an office for a homebased business, you need to know that you have options. You will need to know your local and county laws before making any sudden moves against the resident. Most cities and counties have rental laws that favor renters. This means you will have to prove your case on the standpoint that they are violating civil laws.

In the end, it's the type of business being run out of the home that matters most. As long as it's not illegal, cause excessive noise or receive complaints from neighbors, most at-home businesses are probably harmless.

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Topics: Residential Property Management