I’m a therapist. Can I see clients in my rent-stabilized apartment? What are the rules for running a business in your apartment?
Most residential leases say an apartment can only be occupied for residential purposes, our experts say. However, New York courts have historically ruled that as long as the stabilized apartment you are renting is your primary residence, you can run a business out of your place unless it is what the court sees as “a substantial breach of material obligation of the tenancy.”
“Doing business out of an apartment doesn’t rise to that level unless you are overdoing it,” says tenant attorney Sam Himmelstein, a partner at Himmelstein, McConnell, Gribben, & Joseph (and a Brick Underground sponsor). This means your business operations would have to change the essential residential character of the building in order for your landlord to successfully challenge you over seeing clients in your apartment.
If you plan on working as a therapist from your apartment, another consideration should be the city’s zoning resolution, which restricts certain professions and limits the amount of space you can dedicate to your business.
NYC zoning allows for therapist offices
Under the city’s zoning rules, you can run a business in a residential unit as long as it is your primary residence and you don’t use more than 25 percent of the apartment—not exceeding 500 square feet—for business use.
“It seems to me a therapy practice, which typically involves someone sitting on the couch, would not use more than 500 square feet of your apartment,” Himmelstein says.
The zoning resolution does prohibit specific commercial uses. For example, you can’t run an advertising or public relations agency, a barber shop or beauty parlor, or provide electrolysis. Neither can you run a veterinary practice, stable, kennel, ophthalmic dispensary, nor pharmacy. Also prohibited are interior decorators’ offices or workshops, real estate and insurance offices, and stockbroking.
“In some ways this section is not keeping up with the times,” Himmelstein says. However, a therapist is not one of the excluded professions.
You are unlikely to face eviction for offering therapy
Case law on whether or not you can see clients at your apartment comes down to a ruling in the 1980s when a landlord tried to evict a clinical psychologist who was seeing patients in her apartment. The court ultimately decided the number of clients she was seeing—estimated at 15 to 22 a week—was too many.
So how do you determine how many clients is too many? “It’s really hard to say,” Himmelstein says.
You could argue the shift to working from home over the past few years has upended these rules. Himmelstein says, very few landlords will try to evict a tenant over their work-from-home business practices unless it is upsetting the character of the building or other tenants are complaining about the traffic.
“This is, in part, because so many people work out of home now—it doesn’t make sense any more—but also the Housing Stability and Tenant Protection Act makes a huge difference,” he says.
When the rent law changed in 2019, landmark tenant protections were passed in an effort to preserve the city’s stabilized apartments that might otherwise be converted into market-rate apartments by various methods including vacancy deregulation. This is no longer an option for landlords so they don’t have the same incentives to move tenants out of stabilized apartments.
Another important detail is your ability to stay in the apartment if you are challenged on this issue. “It’s considered a curable breach,” Himmelstein says. So, if your landlord challenges you over running a business out of your apartment, you can stop the work to avoid eviction.
This is different from a challenge over whether your place is your primary residence. This is a requirement for rent-stabilized apartments and in this scenario, if you say you plan to move back into the apartment full-time, it may not be enough to prevent eviction.
This raises the issue of tax deductions. If you run a business out of your apartment, you cannot deduct more than 25 percent of your rent as a business expense. This aligns with the zoning resolution stating only 25 percent of the apartment can be used for business purposes.
“There’s a reported decision where a tenant deducted 100 percent of their rent as a business expense and the court held the tenant forfeited their right to claim the apartment as their primary residence,” Himmelstein says.