HOA's Can't Prohibit Home-based Businesses

On April 19, 2024, Governor Polis signed a new bill into law that will limit the rights of homeowner’s associations (HOAs) to prohibit or regulate small businesses started in homes in their community. The bill, S.B. 24-134, passed both chambers of the legislature by an overwhelming majority, with only one vote opposed in both chambers combined.

S.B. 24-134 opens by stating that HOAs cannot prohibit their members from starting small businesses in their homes. The rule applies only to “home-based” businesses, meaning any business whose main office is a home, or any business which has its base of operations in a home. There are two important caveats to the rule. First, the business must comply with noise and nuisance ordinances applicable in the city or county. Second, HOAs may regulate home-based businesses, but only if the regulation is “reasonable.”

These regulations can govern architecture, parking, landscaping, noise, or anything else concerning small home-based businesses. “Colorado’s businesses are being regulated to a point of bankruptcy,” said Senator Jim Smallwood (R—Douglas County), a sponsor of the bill. “By freeing home-based business owners of unnecessary regulations, including those from some HOAs, we are fostering an environment in which our state’s small businesses can thrive.”

The new bill takes effect August 7, 2024. If you work for an HOA that regulates businesses within your community, or would like to explore regulating businesses, this new law may affect you. We at Dufford Waldeck are ready to help you ensure that all your regulations are legal and enforceable. Give us a call.

Written by Madeleine Mayfield and Shelly Dackonish