Be careful before you turn a property into a live/work space

Live/work spaces have become increasingly popular in recent years – particularly in cities like Los Angeles where real estate prices are among the highest in the country. However, it’s not really a new concept. People have lived above their stores, bars, restaurants and other businesses for centuries.

Zoning laws, however, are much stricter than they used to be. Cities have zoning laws in part to protect property values. Many areas are zoned strictly for residential or commercial use. They can also be zoned as historic areas or for industrial or agricultural use. Some do allow a combination of residential and commercial use, with certain limits, like what kind of business can be conducted. These are known as mixed-used zones.

Can you let a tenant live in a space they rent for their business?

What if you are renting out a commercial property and your renter asks to live there? They’ll pay you extra, and you’ll have someone there during the night, so this might actually be a deterrent to crime. 

But is that legal? It depends. It’s crucial to check the zoning ordinances for the area. If it’s zoned only for commercial property, you may be able to get a permit. However, you’ll need to check with your insurance company to determine whether your policy covers something that might go wrong. What happens if your tenant leaves something on the stove and starts a fire or lets the bathtub overflow? You might not be covered for the damage.

If you go ahead and let a tenant live in a commercial space without getting the proper authorization, you risk fines if the authorities find out. Further, if your tenant is injured or killed by an intruder in the middle of the night, you could face civil and/or criminal liability if the space wasn’t meant for someone to live in.

Whether you want to live in a commercial property you own or you’re considering letting a commercial tenant use their space to live and work in, it’s crucial to determine the zoning restrictions for your area. Trying to get around them can only lead to problems. If you are facing legal issues involving the misuse of commercial property for residential purposes (or vice versa), it’s important to seek experienced guidance.

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