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Tenant Running a Business from Her Apartment – MICHELLE’S MONDAY MANDAMUS!

December 28, 2016:  This Q&A post originally appeared on the LandlordsNY blog, where Michelle Maratto Itkowitz is the "Legal Expert".
  
I am the LandlordsNY “Legal Expert”.  My goal is to post in the blog all of the questions I get from LandlordsNY members (keeping the member anonymous) and my answers thereto, when I think that such questions and answers would be of interest to other people.  Let me know if this is helpful.  These questions are excellent, keep them coming.

Question:  We have an IMD [interim multiple dwelling pursuant to the Loft Law].  We are aware that one of the tenants is running a business from her apartment.  Does her use of her apartment as a business violate the Loft Law (or any other law) and if so, is it cause for eviction?  Because of the Loft Law she has an incredibly cheap rent and protection from eviction, yet she's using the space to make money, none of which goes to the landlord.  How could this be?  Thanks in advance.

Answer:

There is nothing in the Loft Law (Multiple Dwelling Law Article 7-C) that specifically prohibits a Loft from being occupied as a business.  Remember, the whole purpose of the Loft Law is that a commercial building is supposed to be moving toward a residential certificate of occupancy.  Many Loft leases actually say that the use is for joint-living-working purposes. 

So, as always, the first place I would need to look in order to thoroughly answer this question is the lease.  The LandlordsNY Lease at § 3(A) of that lease states:

“Tenants shall use the Apartment for living purposes only.”

Even if the tenant’s lease is not so clear, most leases say something like this:

“Government laws and Orders. You will obey and comply (1) with all present and future city, state and federal laws and regulations…”

Then you can perhaps claim that the tenant’s business in the apartment is a violation of laws and regulations.  So next, we have to look at the Zoning Law.

A use that is “accessory” is one that is customarily incidental and subordinate to the primary use of a parcel.  Aim Rent A Car, Inc. v. Zoning Bd. of Appeals of Village of Montebello, 156 A.D.2d 323 (2d Dep't 1989).  In other words, an “accessory” use is ok.

The Zoning Resolution of the City of New York § 12-10 (“ZR 10-12”) has this to say about carrying on an occupation inside one’s apartment:

“(a) A "home occupation" is an accessory use which:

(1)          is clearly incidental to or secondary to the residential use of a dwelling unit…;
(2)          is carried on within a dwelling unit…by one or more occupants of such dwelling unit, except that, in connection with the practice of a profession, one person not residing in such dwelling unit…may be employed; and
(3)          occupies not more than 25 percent of the total floor area of such dwelling unit…and in no event more than 500 square feet of floor area.

(b) In connection with the operation of a home occupation, it shall not be permitted:

(1) to sell articles produced elsewhere than on the premises;
(2) to have exterior displays, or a display of goods visible from the outside;
(3) to store materials or products outside of a principal…building;
(4) to display, in an R1 or R2 District, a nameplate or other sign except as permitted in connection with the practice of a profession;
(5) to make external structural alterations which are not customary for residences; or
(6) to produce offensive noise, vibration, smoke, dust or other particulate matter, odorous matter, heat, humidity, glare, or other objectionable effects.

(c) Home occupations include, but are not limited to:

fine arts studios
professional offices
teaching of not more than four pupils simultaneously, or, in the case of musical instruction, of not more than a single pupil at a time.

(d) However, home occupations shall not include:

advertising or public relations agencies
barber shops
beauty parlors
commercial stables or kennels
depilatory, electrolysis or similar offices
interior decorators' offices or workshops
ophthalmic dispensing pharmacy
real estate or insurance offices
stockbrokers' offices
veterinary medicine.”

In Mason v. Department of Buildings of City of New York, 307 A.D.2d 94 (1st Dep’t 2003), the Court upheld a finding by the DOB that a tenant’s renting out of an apartment as a commercial recording studio was an invalid home occupation use of the property. 

In Prospect Park Southwest (a Board of Standards and Appeals decision), the occupant of the premises ran a business called AIM Strategies, “in the front portion of her home performing work as an organization development consultant.  The building in question was a three-story building and the home office was situated in a room off the front entry of the house.  The office contained three desks, one was used by an employee.”  The occupant testified that she used, “the office to research, design and develop materials for her company but did not see clients there.”  At issue was whether her use of the premises violates the Zoning Resolution or is a, “permissible home occupation accessory use.”  The City argued that the tenant was, “not operating a permissible home occupation because her office occupies more space than is permitted under the Zoning resolution, and because ‘organizational development consultant’ is not a permissible profession under the Zoning Resolution.”  Ultimately, after a seventeen (17) page decision, the Board of Standards and Appeals found that the use WAS permissible. 

So, assuming that there is not a lease clause allowing tenant to use the loft unit as a business, and assuming there is a lease clause that at least prohibits violating laws and regulations, then the questions to consider are as follows:

  • Does the tenant have more than one employee?
  • Does the business occupy not more than 25 percent of the total floor area of the dwelling unit…and in no event more than 500 square feet of floor area?
  • Does the business do any of the things prohibited (see above), for example -- sell articles produced elsewhere than on the premises; produce offensive noise, vibration, smoke, dust or other particulate matter, odorous matter, heat, humidity, glare, or other objectionable effects.
  • Is the business one of the kind prohibited (see above), for example -- depilatory, electrolysis or similar office or a real estate or insurance office?



Thank you for this question.  Finally, I am obligated to say that this answer is for general informational purposes only, does not constitute legal advice, and does not create an attorney and client relationship between us or between you and LandlordsNY. 

Let me know if you need anything else.

Michelle Maratto Itkowitz
Itkowitz PLLC
26 Broadway, 21st Floor
New York, New York 10004
(646) 822-1805

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