Can You Run a Daycare Out of a Rental Property?

The truth is that laws and regulations vary by state – however, in most places in the United States, a tenant is allowed to run a daycare out of a rental property as long as they comply with certain legal requirements. In some states (such as California and New York), landlords have little or no right to restrict daycare operations in their rentals.

But in other states, landlords can prohibit daycare providers from operating in their apartment complex, however, such restrictions are found in the lease which might ban business use.

Have it in mind that these restrictions are to make sure that the property can be relished as a residence. Although it’s ideal to have certain lease restrictions that forbid business establishments like shops, printing presses, and other commercial activities, running a small daycare from a rental property can be quite different from all other businesses.

Daycares create no real noises or other issues common with normal businesses. In times past, even federally owned subsidized housing units (HUD) have allowed daycare providers to run.

Howbeit, anyone looking to run a day-care business out of a rental property is expected to ensure that they adhere to all legal rules and requirements and also share the details with their landlord or property manager.

Anyone looking to start a daycare business from a rental property is expected to provide 30-days advance notice to their landlord or property manager before they open their doors. Some state license applications include a form you can leverage to provide this notice.

Note that your landlord is legally allowed to charge a higher security deposit if you intend to run a daycare business from the property. They may also want to charge a higher security deposit owing to the higher risk that young children may damage the property.

In addition to sharing licensing information with the landlord, you are expected to also share evidence of financial responsibility.

Have it in mind that there are three ways to buttress financial responsibility: acquire adequate liability insurance; secure a bond of at least $300,000; or get signed affidavits from each child’s parents acknowledging that they are well informed of the lack of liability insurance or bond.

Basic Rules and Regulations for Running a Daycare Out of a Rental Property

Just like it was stated above, rules and regulations concerning daycares and family child care businesses vary across the board. These businesses can be operated in all residential properties, (whether apartments, condominiums, or single-family residences), as long as certain conditions are met. These conditions include;

1. Maximum Number of Children

Generally, there are two types of family child care homes: “small family child care homes” and “large family child care homes”. Note that a small family child care home can only offer care to about 8 children, while a large family child care home provides care for about 14 children.

In the United States, to run legally from a residential rental property without the permission or consent of the property owner, a small family child care home will have to be limited to six children or less, including the operator’s children.

However, note that the number can be increased up to a total of eight children, as long as the property owner provides written consent.

To legally run a residential rental property without the endorsement or consent of the property owner, a large family child care home will have to be limited to twelve children or less, including the operator’s children. The number can be increased up to a total of fourteen children, as long as the property owner offers written consent.

2. Compliance with Property Rules and Regulations

Have it in mind that the same justifiable rules that apply to other residents in the rental property may be mandatory too for the daycare business. For instance, the child care business must avoid excessive noise that will affect the peaceful and serene enjoyment of other tenants.

Note that if there is so much noise, damage, etc., the property owner can hand over warnings or notices in the same way it does with other property rule violations.

3. Licensing

In most states in the United States, Family child care homes are expected to be licensed by the State Department of Social Services. Although the requirements can vary from state to county, have it in mind that there are requirements for the home and the care providers (e.g. at least fifteen hours of health practices training).

4. Security Deposit Increase

Just like it was stated above, the property owner can legally warrant the child care provider to increase the security deposit to the maximum allowed by law, which presently is double the monthly rent for an unfurnished unit and, and triple the monthly rent for a furnished unit.

5. Notice to the Property Owner

Also, note that child care providers are mandated to provide property owners thirty days advance written notice of their aim to run a daycare business on the property.

Nevertheless, since in most states the operator is not required to acquire the landlord’s “consent,” the failure of an existing resident to provide prior notice will not give the property owner a basis to shut down the child care business.

6. Insurance or a Bond

In the United States, a good number of States mandate licensed operators to:

• Carry liability insurance of $100,000 per individual/$300,000 aggregate; or
• Hold a $300,000 bond; or
• Let each parent know they do not carry liability insurance or a bond. The operator is also expected to obtain affidavits signed by each parent noting that the parents are alright with the lack of insurance or bond. Operators will also have to let parents know that it is attainable that the property owner may not carry insurance coverage for losses “arising out of, or in connection with, the dealings of the family child care home,” except if the losses are “caused by, or result from, an action or omission by owner for which they would ideally be liable under the law.”

Conclusion

Having a family child care provider in a rental property is not an obstacle or problem, instead, it is a benefit to the landlord.

There are different reasons why a landlord might oppose family child care providers as tenants. Nonetheless, right before you buy or lease a home or apartment, endeavor to check to see if there are any deed restrictions or objections from the landlord.