Illinois Court Upholds Homeowners’ Right to Conduct Daycare Business in HOA Community

Illinois Appellate Court decision (September 25, 2015)

This case involved an action for declaratory relief filed by a homeowners association (“Association”) against four homeowners (“Homeowners”) to enforce a restrictive covenant contained in Association’s governing documents in an effort to prohibit Homeowners’ operation of two daycare businesses within the common interest community.

The community’s declaration of covenants, conditions and restrictions (“Declaration”) mandates that all lots within the community be used only for single family dwellings but also allows for the operation of a home-based business if: (i) the business is conducted within the residence; (ii) the business is not prohibited by city ordinances or regulations; and (iii) no motor vehicle with business markings is parked on the lot or within the Association’s common area overnight. A separate section in the Association’s Declaration, which was the provision that the Association relied on in support of its contentions, prohibited commercial activities which “require or allow customers or the public to frequent the Property for such home occupation.” Association contended that the daycare business operations being conducted by Homeowners required customers to frequent the property resulting in frequent commercial traffic in and around the homeowners’ residence.

The trial court found that Homeowners’ daycare business did not violate the Association’s Declaration and granted summary judgment in favor of Homeowners. Association appealed the trial court decision arguing that a genuine issue existed as to whether the additional vehicles going to and coming from Homeowners’ daycare business constituted the requisite “frequent commercial traffic” that was prohibited by the Association’s Declaration.

The appellate court noted that prior decisions have established that: (i) the language in a homeowners association’s declaration must be construed most strongly against the developer as its author; (ii) covenants in a declaration should be strictly construed so they do not extend beyond what was intended and all doubts must be resolved in favor of the free use of property and against restrictions; (iii) in the absence of a definition within the covenant, words contained in the declaration must be given their ordinary and commonly understood meanings; and (iv) the dictionary can be used to determine a word’s ordinary and common meaning. Because the word “frequent” was not defined in the Association’s Declaration, the court looked to the Webster’s Dictionary definition, which was: “given to some practice: habitual, persistent.”

The appellate court concluded that, in construing the covenant in question strictly against the developer and in favor of the free use of property: (i) the Declaration allowed home-based businesses; and (ii) there was no evidence in the record that the number of cars that entered and left the development to drop off and pick up children at the daycare center reached the level of “habitual, persistent” commercial traffic that would have been prohibited. Thus, the trial court judgment was affirmed.

See case decision: Neufairfield_Homeowners_Ass’ (1)