While many companies are integrating work-from-home practices into their daily work week, others are mandating a return to the office full time. But for some businesses, the landscape has forever changed. During the pandemic, many restaurant owners were forced to cut their losses and close-up shop, with some shifting their business to the new at-home market.
In early 2022, an email came in from a concerned townhouse owner. The writer stated that a neighbour was operating a take-out restaurant from their unit and leaving their back and front doors open to let the heat escape.
Numerous cars were seen attending the unit to purchase and pick-up food. The writer was frustrated since the intense cooking smells meant they were forced to close their windows and doors and were worried the additional vehicles on-site presented a danger to children in the community.
When the unit alleged to be operating the restaurant was contacted, they did not deny anything, explaining that since COVID-19 they had closed shop and were cooking and selling from home. The owner stressed their compliance with public health inspectors who had been at the unit just the day before. business
Most declarations in a residential condominium will have a provision relating to the permitted uses of a unit. It will commonly state that a unit can only be used or occupied as a private single-family residence. However, as stated by Sonja Hodis of Hodis Law, “you have to pay close attention to the exact wording of the declaration, as the definition of “single-family residence” may have different meanings in different condos and in different contexts based on the particular wording of your condo’s governing documents.”
Hodis recommends that if you are trying to ban or control a commercial type of activity at a residential condo, “you would be wise to introduce specific language into your governing documents, beyond just the declaration occupancy provision, to address the types of activities you are trying to control.” Hodis further advises that not every home business or work-from-home arrangement is going to create a concern for condos. There may be some types of activity that a board is prepared to allow but there are other types of activity that the board refuses due to increased liabilities or costs for the corporation or a nuisance for other residents.
Hodis recommends that restrictions are focused on the activity that is not permitted rather than any particular type of business. She also advises that it is important to be precise in the language used in order to make it easier for the corporation to enforce the provisions in the governing documents. “Ambiguous language will make enforcement difficult, and any ambiguity will be held against the corporation as we have seen in recent CAT cases,” she said.
Further to this is the potential impact on insurance. Many declarations will stipulate wording such as, “No unit shall be occupied or used in such a manner as to result in the cancellation or threat of cancellation of any policy of insurance maintained by the Corporation.”
The threat of insurance policy cancellation is a point David Outa, BA, CIP, CRM, Commercial Account Executive, Condominium Practice Lead with Cowan Insurance Group says is particularly poignant when dealing with commercial businesses operating from residential units.
“Clearly someone that owns a restaurant, that’s a commercial operation,” says Outa. “As soon as you bring it home, you’ve transferred a commercial operation to your home and typically, the residential insurance policy does not anticipate exposures relating to commerce. Cooking for your family is different than cooking for take-out deliveries—that means there’s a significant increase for risk of fire. The insurer won’t say, ‘well, we’re going to charge you more,’ they will simply say, ‘this policy is not intended for this type of exposure, therefore we need that to stop or else we are going to cancel the policy.’”
Would a home owner’s personal insurance provide any leeway? Unlikely, says Outa.
“There are two layers of insurance,” he explains. “There’s the corporation’s insurance, but also the unit owner’s. I can guarantee that the unit owner’s insurer will have the same concerns because the liability coverage you get on a home policy does not anticipate the chance of someone suing you because they got food poisoning from your commercial operations. Home insurers are very selective in the type of home/business exposures they will gladly insure—it’s a very limited scope.”
And what about yoga? Can a unit owner hold a yoga class—paid or not—on the common elements?
“Yoga is a little different,” says Outa. “However, remember the corporation is the occupier of the common elements which means that the liability which comes out of that can be assigned to the condo corporation. What the condo corporation’s insurer expects is that anybody using the common elements—if you’re a unit owner—that liability should follow you.”
“Unless the condo is the one putting on the yoga class, that’s a different issue, because then it is sanctioned by the condo. They (the corporation’s insurer) may not say they’re going to cancel the policy, but they will be looking to clarify that if something happens, that liability is going to be pushed back to the individual who is running that lesson.”
In terms of owners using common elements, Hodis cautions that this is another issue that needs to be clearly addressed in your governing documents, and condos must be careful what they allow owners to do on the common elements.
“Condominium corporations are ultimately legally responsible for what happens on their common elements,” she says. “As such, you do not want to permit an owner to carry on any type of activity on the common elements that will increase the corporation’s liability or costs or that will create a nuisance for other owners and occupants.”
Fine-tuning a declaration as well as your other governing documents is particularly important when negotiating commercial activity at your building. Decide if the wording is specific and clear. If you are not sure, it’s time to review with a condo lawyer.
Ross Boncori, RCM, OLCM, has 15 years’ experience of property management and is a licensed condominium manager with The Enfield Group.
