One of my tenants wants to run a small day care program out of their rental unit. Do I have the legal right to forbid this? I’m concerned about insurance and liability issues.
It depends on the location of your rental property. In some states (such as California and New York), landlord have limited ability to prohibit day care operations in their rentals.
Under state law in California, for example, a landlord may not prevent a tenant from using the rental premises as a licensed family day are home (H&S Section 1597.40)—even if your lease or rental agreement prohibits the operation of a business on the rental premise or limits the number of occupants. To qualify, your tenant must have a state license to run a family care home, and the property must meets building codes. Rules vary in California for “small” (eight or fewer children) and “large” (nine to 14 children) family day care operations. For details, see the California Department of Social Services website section on child care licensing.
Also, check out your local building code for restrictions on day car operations in rental properties.
Finally, be sure to contact your insurance broker to determine the impact of a family care center on your insurance and liability.
And for more details on California landlord-tenant rules, including other restrictions on home businesses in tenants, see Nolo’s The California Landlord’s Law Book.