North Carolina S.L. 2026-51 (H.B. 372): Home-Based Businesses and HOA Covenants

Quick Answer

North Carolina Session Law 2026-51 (House Bill 372) adds G.S. 160A-205.8, which stops a city from prohibiting or requiring permits for "no-impact home-based businesses." It became law on July 7, 2026. The part HOA boards care about is subsection (c): the section "shall not apply if the operation of a no-impact home-based business is prohibited by" a deed, covenant or agreement restricting land use, or by "any master deed, bylaws, or other documents applicable to a homeowners association." In other words, the act regulates cities, not associations, and association restrictions are left in place.

At a Glance

What the Law Says

The rule for cities

Subsection (a) says a city "shall not adopt an ordinance or other regulation prohibiting no-impact home-based businesses within its jurisdictional limits or require a person to apply, register, or obtain any permit, license, variance, or other type of approval to operate a no-impact home-based business." A city may still impose reasonable regulations that are narrowly tailored for any of these purposes:

• Protecting public health and safety, as allowed by law.
• Making sure the business is compatible with the residential use of the property and surrounding residential use, is secondary to the use of the property as a dwelling, and complies with State and federal law, including payment of applicable taxes.
• Prohibiting or limiting use of such businesses for selling illegal drugs, liquor, operating a structured sober living home, pornography, obscenity, or nude or topless dancing or other adult-oriented businesses.

Subsection (b) bars a city from requiring, as a condition of operating, that the owner or occupant petition to rezone the property for commercial use or install fire sprinklers in a building subject to the North Carolina Residential Code.

The HOA and covenant carve-out

Subsection (c) reads in full: "The provisions of this section shall not apply if the operation of a no-impact home-based business is prohibited by the terms of: (1) Any deed, covenant, or agreement restricting the use of the land. (2) Any master deed, bylaws, or other documents applicable to a homeowners association."

What counts as "no-impact"

Subsection (d) defines a no-impact home-based business as one where the total number of on-site employees and clients does not exceed the city's occupancy limit for the property, and the business activities:

• Are limited to the sale of lawful goods and services.
• Do not generate on-street parking or a substantial increase in traffic through the residential area.
• Occur inside or in the yard of the dwelling.
• Are not visible from the street.
• Do not store merchandise, equipment, products, supplies or materials outside of the premises.

A "home-based business" is "any business owned and operated by the owner or occupant of the residential dwelling that manufactures, provides, or sells goods or services."

What This Means in Practice

For boards

Nothing in the act text gives an owner a right to run a business in defiance of association documents. If your declaration, bylaws or other governing documents prohibit the business, subsection (c) says the city-focused section does not apply. Our reading: a board enforcing an existing, validly adopted home-business restriction is not affected by this act. The board still has to follow its own documents and Chapter 47F or 47C procedures, such as notice and hearing before fines.

For owners

The act limits what the city can require. It does not say your association must allow the business. If your documents are silent on home businesses, the act does not tell the association how to treat them. That is an open question and a document-interpretation issue for counsel.

Where the act is narrow

• It is codified in Chapter 160A, which governs cities. The text refers only to "a city." We did not read anything in the act extending it to counties, so counties are not addressed.
• Our reading: because the definition ties the occupancy limit to "the city's occupancy limit," the section is built around city rules.
• The act does not define how an association should treat a business that meets the no-impact definition. Association restrictions are governed by the declaration and by Chapters 47C and 47F.

Interaction with association amendments

If a community wants to allow or limit home businesses, that is a declaration or rule question. See our pages on declaration amendments and the Supreme Court's Armstrong v. Ledges reasonableness test.

Timeline

Related North Carolina Law

• Chapter 47F: Planned Community Act overview
• Chapter 47C: Condominium Act overview
• G.S. 47F-2-117: declaration amendments
• G.S. 47F-3-107.1: fines and suspension hearing
• S.L. 2026-59: flag display
• North Carolina HOA laws complete guide

Board Checklist

• Read the use restrictions and any home-occupation or business clauses in your recorded declaration, bylaws and rules.
• Decide, with counsel, whether any silent or vague clause can fairly be applied to a home business, and whether an amendment would be better.
• Remember that city permit rules and association rules are separate questions; a city may not require a permit, but the association's documents may still prohibit the business.
• Apply any enforcement the same way to every owner and follow the notice and hearing steps in your documents and the statute.
• Do not tell owners that the act overrides the HOA. Subsection (c) says the opposite.
• Have counsel review before sending a violation letter over a home business.

Frequently Asked Questions

Does North Carolina law now let owners run businesses from home regardless of HOA rules?

No. G.S. 160A-205.8(c) says the section does not apply if the business is prohibited by a deed, covenant or agreement restricting land use, or by HOA master deed, bylaws or other documents.

Who does the act regulate?

Cities. The section says "a city shall not" adopt a prohibiting ordinance or require a permit. The act does not amend the Planned Community Act or the Condominium Act.

When did it take effect?

When it became law, which was July 7, 2026, when the Governor approved it.

What is a no-impact home-based business?

One where occupancy stays within the city's limit and the activity is lawful, does not create on-street parking or a substantial traffic increase, occurs inside or in the yard, is not visible from the street, and has no outside storage of goods or materials.

Can an HOA adopt a new rule against home businesses?

The act does not address that. Whether and how an association can restrict home businesses depends on its declaration, the amendment procedure and North Carolina association law. Confirm with counsel.

Does the act apply to counties?

The text we read refers only to cities and sits in Chapter 160A. It says nothing about counties.

Where This Comes From

This page is based on the enrolled text of Session Law 2026-51 (House Bill 372) published by the North Carolina General Assembly at ncleg.gov. We did not read local ordinances or any court interpretation of the new section.

How APM Helps

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed North Carolina attorney before acting.