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Can I Run a Business From My Apartment? Michelle Itkowitz Article in Bushwick Daily

March 15, 2019

Recently, a shorter version of this article originally appeared in Bushwick Daily, where Michelle Itkowitz is the "Tenant’s Rights Adviser".

Hi, I'm Michelle Itkowitz, an instructor on the Tenant Learning Platform and Bushwick Daily's Tenant’s Rights Adviser. This is the first article in a series that will bust some common myths contained in your apartment lease. As a New York City tenant, you have many rights. And no matter what your lease says, those rights cannot be taken away.

But how can you know which sections of your lease are binding and which are just…myths? This series will tackle your leasing issue one myth at a time. We’ll start with the section of your lease that says your apartment is for “living purposes only,” and what that means if you’d like to run a business in your apartment.

What Your Lease Says:

First, let us look at a few common lease clauses regarding the use of your apartment. Here’s one in a typical old fashioned form lease:
"APARTMENT AND USE…You shall use the Apartment for living purposes only."
Here’s another clause, this one is located in a more modern lease, custom-made by a large landlord for a large new building:
"USE OF APARTMENT. The Apartment must be used only as a private residential apartment to live in and for no other reason. … Home office use is permitted, so long as such use does not violate applicable laws, and provided that no employees or clients use the Apartment with respect to such home office use. No auctions, sales, public gatherings, group tours or exhibitions are permitted. Any business meetings conducted by Tenant at the Building shall take place in the lounge in the Building and shall be subject to all provisions of this Lease relating to guests, visitors, meetings and conferences."
But are you really prohibited from running your business in your apartment? And if you do run your business from your apartment: can you never have an employee come in to help you, or see a client, or customer? Bushwick is full of creators and office space is expensive. What should you do if you’re selling small batches of kombucha or hot sauce made in your living room? And what if you’ve converted your living room into a tarot reading center?

The Real Deal:

Under certain circumstances, those lease clauses are untrue. Let’s bust these lease myths!
The NYC Zoning Resolution (“ZR”) allows you to have what is known as a “Home Occupation.” The trick is, figuring out what type of businesses and activities fit into the definition of permissible home occupation and which do not. See ZR § 10-12.

Your business use of your apartment has to remain secondary to the residential use of the apartment. In other words, your apartment has to be mainly for living in. Your business cannot occupy more than 25% of the apartment, and no more than 500 square feet. So, if you are running a company that makes biodegradable toothbrushes from your apartment, make sure you contain the business to only one-quarter of the apartment. See ZR § 10-12 (a).

You can’t sell things that are not produced in the apartment. Nothing about your business can be visible from the outside of the apartment; you cannot put a sign up outside. Your business cannot create any disturbing noise, vibrations, or bad odors. These rules also apply to being a good neighbor. See ZR § 10-12 (b).

You specifically cannot run these types of businesses from your apartment:

  •  advertising or public relations agencies
  • barber shops
  • beauty parlors
  • commercial stables or kennels
  • depilatory, electrolysis or similar offices
  • interior decorator offices or workshops
  • real estate or insurance offices
  • stock broker offices
  • veterinary medicine

But these types of businesses get the green light:

  • 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
So you can give three students knitting lessons, but only one student ukulele lessons, and not too loud! What gets tough is figuring out what is a “fine arts studio” or a “professional office,” for purposes of the law?

In Mason v. Department of Buildings of City of New York, 307 AD2d 94 (1st Dept 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. The court in Mason noted that legislative thrust of the exemption conveys a goal of protecting artistic and professional uses, but not general commercial uses. Mason at 102.

In Dept. of Buildings v. Owners and Occupants of 86 Prospect Park Southwest, OATH Index N. 1900/06 (Jan. 19, 2007), aff’d, Comm’r Dec. (Mar. 14, 2007), a Board of Standards and Appeals case, 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 violated 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-page decision, the Board of Standards and Appeals found that the use was permissible.

These cases demonstrate how these matters are highly fact-specific.

But, if the business is permissible, you can have one employee show up to the business you run in your apartment every day. See ZR § 10-12 (a). So don’t worry, you can have one paid employee for your business, that places vending machines in airports, stocked with the work of that city’s local artists (this business sounds awesome, someone please start it).

Landlord Waiver to You Running a Business In Your Apartment.

There is, however, another pathway by which a business conducted in your apartment can be adjudged legal. That is, if you have been running the business for a long time and the landlord, who would otherwise have a legal objection to the use, waits too long and thereby waives her right to object.

In a recent Housing Court case, the court found that landlord waived its right to object to a karate school, which taught more than four students at one time, where the tenant proved that he operated the karate school for more than 40 years prior to the commencement of the proceeding (Sam and Joseph Sasson LLC v Guy, 2018 N.Y. Slip Op. 33231[U], 1 [Civ Ct, New York County 2018] [Stoller, J.]). The floor plans dated in 1992 referred to a karate school. The owner testified that he was aware of the karate school perhaps as far back as the late 1990s. The court held that a “condition of such a [lengthy] duration gives rise to a presumption” that landlord and/or the prior owner acquiesced in the use.  Id at *25.

What, however, if the use that landlord waives objection to violates the building’s certificate of occupancy? A waiver defense does not apply and, indeed, a default in a tenancy can bar a waiver defense when it is serious enough as to implicate public policy (Charles Altenkirch & Son Inc. v. CDK Restaurant Inc., NYLJ June 26, 1986 at 17:5 [App Term, 2d Dept, 9th & 10th Jud Dists]), or when such a default adversely affects others, such as in the case of an illegal trade, business, or manufacture (Bel Air Leasing L.P. v. Kuperblum, 15 Misc 3d 986, 991 [Civ Ct, Kings Co 2007] [accepting rent after knowledge of illegal drug trade in apartment does not create waiver]); Hudsonview Co. v. Jenkins, 169 Misc 2d 389, 393 [Civ Ct, NY Co (1996)], or when a tenant engages in illegal construction (508 Columbus v. Beasley, 2010 NY Misc LEXIS 7067, at 12 [Civ Ct, NY Co 2010]).

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