What recourse does a landlord have when a tenant is using both the apartment and garage for a commercial enterprise?

The first line of inquiry is to determine what the lease agreement states with regard to commercial use. Is there an express prohibition against operating a business in the rental agreement for both the apartment and the garage? If the lease does not specify permissible uses or restricts conduct, the tenant may use the apartment for any lawful purpose that is not materially different from ordinary use or for that purpose for which the unit was constructed.

The most recent version of the PPMA lease contains language that defines permissive use. For the apartment, the lease states that use is limited to “living, sleeping, cooking and dining purposes, and for no other purpose….” For the garage, the tenant must agree that the parking space shall be used “exclusively for the parking of motor vehicles….Absolutely NO automotive cleaning, washing, maintenance or repair work of any kind and NO storage of any kind shall be permitted in or about the parking space(s).”

If your rental agreement contains these or similar prohibitions, then you must analyze whether or not you, or your manager, or even the prior owner allowed this tenant to use the apartment and garage for commercial purposes. If past permission was given, and/or management looked the other way, then the tenant’s conduct may be permitted even if the lease prohibits it. This is called “waiver” and “estoppel,” and tenants always employ these legal defenses as a basis to thwart a landlord’s eviction attempt.

If the lease prohibits commercial use and there is no waiver or estoppel, then the owner should immediately serve a “Three-Day Notice to Perform Covenant or Quit.” This notice demands that the tenant cease commercial operations within three days or surrender possession of the rental unit. Failure to do either will allow the owner to file an eviction action with the court. During this proceeding, the owner will have to prove that the tenant breached the lease provision(s) prohibiting commercial use, and further failed to correct the violation within the three-day period after receiving service of the eviction notice.

If the lease is not clear about commercial use, or management may have ignored past violations, the owner may consider whether or not the commercial activity in either or both the apartment and garage violates local health & safety or zoning laws. For example, a tenant who is running a retail establishment out of the garage may be breaching a planning code or a neighborhood restriction. If so, the owner may be able to serve a notice for illegal use that could also result in an eviction action. Indeed, some landlords have reported themselves to the City for their tenants’ unlawful conduct in order to receive a citation, which in turn gives rise to just cause for termination of the tenancy.

Finally, please note that home office use is usually considered reasonable and therefore permissible. Most practitioners advise landlords that prohibiting a home office would not be enforceable. However, when a tenant begins seeing clientele or members of the public, the enterprise may become commercial and subject to prohibition. In addition, residential tenants have the absolute right to operate a small daycare business (six or fewer children) despite a lease provision to the contrary.

In sum, the most important document is the lease, which should confine permissive use to residential purposes, thus ruling out the possibility that your tenant might assert a legal right to conduct business out of the unit. Act promptly when you discover a violation so as to avoid the waiver/estoppel defenses. Finally, as with any legal action, please consult with a qualified attorney before making a move.

DW