The way people work has changed dramatically over the past several years.
Remote work, consulting, online retail, and other home-based businesses have become an increasingly common part of residential communities throughout North Carolina.
Recognizing this shift, the General Assembly enacted House Bill 372, which Governor Josh Stein signed into law on July 7, 2026, as Session Law 2026-51. Effective immediately, the law limits the ability of municipalities to prohibit certain low-impact home-based businesses while preserving the authority of homeowners associations to enforce their own restrictive covenants.
Although the legislation expands protections for many home-based businesses, it does not eliminate all regulation. Municipalities retain important regulatory authority, and restrictions found in homeowners association (“HOA”) governing documents remain fully enforceable. As a result, understanding how the law applies to a particular property or business requires a careful review of both public regulations and private governing documents.
What Is a “No-Impact Home-Based Business”?
The new law protects only a specific category of businesses identified as “no-impact home-based businesses.”
To qualify as a no-impact home-based business, a business must satisfy every requirement established by the statute. The business:
- must not exceed the city’s occupancy limit for the residential property in terms of total on-site employees and clients;
- must involve only lawful goods or services;
- cannot generate on-street parking or a substantial increase in neighborhood traffic;
- must operate entirely within the residence or its yard;
- cannot be visible from the street; and
- cannot store merchandise, equipment, products, supplies, or materials outside of the premises.
The General Assembly intentionally limited these protections to businesses that maintain the residential character of the neighborhood. Examples may include professionals such as accountants, consultants, architects, software developers, or graphic designers who primarily work from a home office without creating noticeable impacts on surrounding properties.
Importantly, this is not a balancing test. Every statutory requirement must be satisfied. If a business generates significant customer traffic, visible outdoor operations, or other impacts inconsistent with the statute, it falls outside the law’s protections.
What Municipalities Can – and Cannot – Regulate
Perhaps the most significant aspect of the legislation is its limitation on municipal regulation.
Under the new law, municipalities generally may not prohibit qualifying no-impact home-based businesses or require business owners to obtain permits, licenses, registrations, variances, or another type of approval simply to operate such a business from their residence.
For many cities and towns, this represents a meaningful departure from existing home occupation regulations.
The law, however, does not eliminate local authority altogether. Municipalities may continue to adopt reasonable, narrowly tailored regulations to: (1) protect public health and safety; (2) ensure the business remains compatible with and secondary to residential use and complies with state and federal law, including applicable taxes; and (3) prohibit no-impact home-based businesses involving illegal activities.
The statute also provides that municipalities may not, as a condition of operating a no-impact home-based business, require the property owner to submit a petition for rezoning to commercial use or install fire sprinklers in any building or structure subject to the North Carolina Residential Code.
An Important Distinction: Counties Are Not Included
The legislation applies only to municipalities governed by Chapter 160A of the North Carolina General Statutes.
Because the law does not amend Chapter 153A, it does not directly affect county regulation in unincorporated areas. Consequently, property owners may encounter different regulatory requirements depending upon whether their property is located within municipal limits or in an unincorporated portion of the county.
The HOA Exception: Private Covenants Continue to Govern
One of the most important provisions of the statute is also one of its clearest.
The law expressly provides that it does not supersede deed restrictions, restrictive covenants, declarations, bylaws, or other governing documents applicable to homeowners associations.
Accordingly, if an HOA’s governing documents prohibit or restrict home-based businesses within the community, those restrictions remain enforceable despite the new legislation.
Looking Ahead
Session Law 2026-51 reflects the General Assembly’s recognition that home-based businesses have become an established part of North Carolina’s economy. While the new law creates meaningful protections for many no-impact home-based businesses operated from residential property, it also raises important implementation questions for stakeholders across the state.
Whether a particular business qualifies for protection depends upon the specific facts, including the nature of the business, its operational characteristics, applicable municipal regulations, and any restrictive covenants affecting the property.
For HOA boards and community managers, this presents an opportunity to review governing documents and evaluate whether existing provisions clearly address home-based businesses. It may also be prudent to communicate with homeowners regarding the distinction between municipal regulations and private covenant restrictions.
Cities and towns will likewise need to consider the impact of the new statute on existing zoning ordinances, home occupation regulations, and permitting requirements to identify provisions that may conflict with the new statute. Existing regulations may require revision to ensure compliance while continuing to protect legitimate public interests.
Whether you are an HOA board navigating enforcement questions or a property owner considering a no-impact home-based business, our Land Use and Zoning team is here to help. Please contact us with any questions about how this new law may affect your community or business.
