Ask an Edina Realty Lawyer: Is it legal for me to operate a business out of my home?

Homeownership can be complicated, but we also think it’s one of the most rewarding ventures out there. In our series, Ask an Edina Realty Lawyer, we are hoping to demystify some of the trickier aspects of buying, selling and owning a home.

In this edition, one of our lawyers discusses the laws and rules that may affect a homeowner’s ability to operate a business out of their home.

Dear Edina Realty Legal,

I’m thinking about starting up a mail order business in my home. Am I allowed to run a business out of my residence?

Probably, although it depends on what you want to do specifically and the city in which your home is located. Let me explain.

By your question, I can see that you know there are some limitations on what you can do on your own property. These limitations are imposed by the local government — typically the city, but sometimes a township or the county. The regulations are called zoning laws.

What is zoning?

Cities typically want to exercise some level of control about how property can be developed and used. They do this by dividing the city into various zones, which may include, among others:

• Single-family residential
• Multi-family residential
• Commercial
• Industrial

For each zone, the city designates what types of activities and uses are (a) permitted, (b) permitted with conditions and restrictions, or (c) outright prohibited. This is why someone can’t build a factory in your residential neighborhood.

Home occupations

Many zoning laws contain regulations specific to running a business out of a home in a residential area. In the legal and government-regulation world, we refer to these businesses as “home occupations.” Many cities allow home occupations but impose various rules and limitations on the operation of the business.

The primary concern of these regulations is that the residential neighborhood still maintain its residential character and that the business not disturb its neighbors. In order to accomplish this, the cities will set forth various rules, commonly concerning:

• Is exterior signage advertising the business allowed?
• Who can participate in the business at the home? In Minneapolis, only one nonresident employee can work in the home. Some cities don’t allow non-residents at all.
• Can customers and deliveries come to the house? In North Oaks, Minnesota, the city prohibits any activity outside of the house itself, including deliveries to the business.
• If customers are allowed at the house, are there specific requirements for liability insurance?
• What equipment and machinery, if any, can be used?
• Some types of home occupations are simply prohibited. Each city tends to have its own list of prohibited home businesses. For example, in Eau Claire, Wisconsin, you can’t have an ice cream shop in your home. And most cities do not allow residents to run an auto repair shop as a home business.

If you’re thinking about starting a business in your home, be sure to check with your city or other local authority to learn about any restrictions on your plans.

Condos, townhouses and other associations

If you live in a condo, townhouse or some other property where you have a homeowner’s association (HOA), you may have an additional layer of rules on top of the government regulations. Even if a home business is permitted by the city, an HOA could prohibit it or place other restrictions on its operation. If you happen to own a property subject to an HOA, check to see if any of the HOA rules impact your home business idea.

The Edina Realty Legal Department serves as in-house counsel for Edina Realty and does not represent private clients. This Insight is not intended to provide legal advice.