Running a small business from your apartment can be useful, but it is important to understand the legalities around it, and make sure you are in the clear

In cases where zoning laws and the co-operative housing society in question permit it, there can be cases where running a business from home is viable. Doing so can save on the cost of renting or purchasing a commercial space. It also saves on the cost of commuting to and from work as well as on many operational costs.

It bears mentioning that full-scale commercial use of a residential flat is often opposed by co-operative housing societies. That said, utilising 20 per cent of the space in a residential flat is legally permissible as long as the business in question falls within certain categories.

For example, the MSC Apellate Court ruled in favour of a certain resident in Ghatkopar, Mumbai in 1986, stating that carrying out activities such as yoga classes in a residential flat does not constitute a breach of the bye-laws of a co-operative housing society. The ruling basically meant that the professional activity of teaching certain arts would not be viewed as commercial activity, even if certain charges are levied.

In a case filed under the Karnataka Shops and Commercial Establishments Act, 1961, it was ruled that the use of a residence as an office by chartered accountants, lawyers and doctors would not be considered as a commercial activity. The premise of this ruling was that the work and skill involved in such a profession is predominantly mental or intellectual rather than physical or manual.

These cases clearly indicate that there are some instances where professional activity in a residential flat would be considered legal. However, these should not be taken as blanket rulings. Apart from the individual bye-laws of housing societies, different state laws would need to be considered.

Whatever the other aspects of the case may be, it is certainly necessary to get the approval of the housing society in a general body before using a residential flat for commercial purposes. Depending on the nature of the business and also subject to the approval of the housing society, it may also be necessary to obtain permission from the local municipal authorities for conversion .

It may be possible to obtain permission from the housing society to conduct a business that involves any movement of people or storage of goods in the residence. Nevertheless, it is not a good idea to start any kind of business in a residential flat without getting complete clarity on the legal aspects.

Even if a housing society permits business activity in a certain case, such activity can still be deemed illegal and be notified accordingly. It is not advisable to take anything for granted, but best to have the legality of each undertaking examined by a qualified lawyer.

Om Ahuja

(The author is CEO - Residential Services, Jones Lang LaSalle India)