We had this potential situation in our co-op; a board member wanted to open a small daycare situation in his apartment. The board decided that it was too great a liability for the corporation; the board member decided to move to a freestanding home, no hard feelings.

What does your PL say?

We have. Check your prep lease and bylaws. Our Board frist had the MangAgent send certified letters notifying the Owner that his Business (with employees) was illegal according to the lease and bylaws.
The Board was ignored, and had the lawyer send notification -- the frist were ignored, but as the threts grew more serious -- finally the Owner closed his business.

You have serious Insurance/libility and personal safty isses -- Also, if they are running a business -- the CofO would have to be changed to reflect a business. Also -- check the tax code -- the IRS might be intrested in a property used for a business -- not not paying property taxes...Also, his workers are not bonded, and prbably spend more time in the building than the residents -- this presents safty issues for the other Shareholders -- Subletters have to go though a vetting process....whereas you have total strangers spending more time in the building, with complete access -- without knowing who they are.

The big complaint from neigabors -- was the traffic -- and strangers roaming around the building. His employees used the Stairwell for smoking and the halls as thier personal Phone booth.
The Board has to be consistant and determined. Good luck.VP

Other posters have correctly pointed out some of the problems involved, and you are certainly within your rights to prohibit any business operations in a cooperative residence. However, it's worth noting a special case that won't get you into trouble, at least as far as zoning and tax laws are concerned: a "Home Occupation." Here's the definition from http://www.nyc.gov/html/dcp/html/zone/glossary.shtml --

"A home occupation is a business operated by the occupant(s) of a home, which is accessory to the residential use. It is generally restricted to no more than 25 percent of the residential floor area (with a cap of 500 square feet). Specific occupations that may generate excessive noise, odors or pedestrian traffic are not permitted."

A classic example would be a psychotherapist using one room of a primary residence to see patients. Your Board should certainly consult with your attorney before permitting any such arrangement, but such a Home Occupation is not intrinsically a bad idea.

Point of information on definition of home occupation. Pedestrian traffic is often defined as people visiting the site for the purpose of doing business. The example of a therapist would be excluded from allowable use because patients could be defined as pedestrian traffic. Another point to remember is that many businesses require permits which list the address of the business. Usually, this address must be zoned for the applicable business with some restrictions. As an example, a real estate broker can only operate from a location where they can post a sign. This must contain the name of the company and broker and residential zoning doesn't permit this. Therefore, an apartment or residentially zoned home would not be acceptable real estate office locations unless the sign can be posted on the door of the apartment or front of the house. Boards should ascertain the legality of the location and then act accordingly.

Dianne, from what our attorney has told us, the pedestrian traffic issue for a psychotherapist (or similar low-traffic business) isn't a problem if the home office is on the first floor of the building. For higher floors, it's more debatable, but still often permitted. Also, to emphasize, the board has the final say in the matter and is never obligated to permit such an arrangement.

The "first floor" exception is usually in buidings which have a building permit for this type of occupancy. You are absolutely correct in stating that the board has the final say. However, my point was that in many professions licenses require zoning which permits the business at hand. Therefoe, the board has to make certain that whatever permits or licenses are required are in order.

Dianne, you've raised some interesting points. It's true that many buildings are already zoned for commercial activity on the first floor, but our building is zoned residential top to bottom. Nonetheless, our attorney told us that a first-floor "home occupation" with low pedestrian traffic would be allowed without a change in zoning.

We went one step farther and drafted a Letter of Understanding that all prospective buyers must sign and submit with their purchase application. Here's an excerpt:

"We understand and agree that purely commercial use of apartments in the Building is not permitted. Notwithstanding the foregoing, we understand that with the written consent of the Board, a resident shareholder may be permitted to work from his/her apartment if such work is in compliance with the requirements of a 'home occupation' under the New York City Zoning Resolution. Moreover, should any governmental agency issue a violation based upon any commercial use of the Apartment, we acknowledge responsibility for and indemnify [the coop corporation] with respect to the payment of any fines associated with such violation and we agree to undertake the necessary action in order to vacate such violation."

Your point about the board validating any permits for the home occupation is a good question. I don't know whether this is required, but it seems like it would put an undue burden on the board -- especially since such permits typically require periodic renewal.

HabitatReporter, if you're reading this, it seems like a good subject to pose to an attorney. What are some Yes/No/Maybe examples of legitimate home occupations? What steps should a board take when deciding whether to allow a specific home occupation or other commercial use? And does the board have an obligation to validate a shareholder's commercial permits and the like?

What if the building in which the home occupation takes place doesn't have a Certificate of Occupancy?
Building predates CO. compliance.
Would a home occupation then fall under the Propietary Lease or ByLaws and not be considered a NYC zoning issue?