Hi Guys

I have given flat on rent one n half yr back.now tenant is asking for NOC as he want to start business , which is basically an online business which can be done with internet connection.He needs NOC for account opening.Guys consider this matter urgent as I don't want to delay him.Please let me know is there any legal complications in this.I am an NRI and want to support him in this.

Regards
Pune_kar
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  • Check with society bye laws if they allow commercial activities in the flats. As such it shouldn't be an issue, but if he is going to have his employees come over and work in the flat, it wont be acceptable to the society. Many startups register their company giving the address of their flats. So there is nothing unusual.
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  • Certain commercial activities are permitted in flats.
    Anyway his business is online on the net.
    There is no legal restriction on such businesses- as long as he is not converting his flat into a godown or he is going to have large number of visitors coming and going.He should take NOC from society and carry on his business.
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  • 'Residential Premises' cannot be used for conduct of business legally (If I am not wrong, Shop & Establishment Act does not allow the same) except in certain cases like professional (generally lawyers / doctors) working in his individual capacity.

    Without going into much detail and presuming that tenant intents to work alone (&without bringing employee / clients) in the Society and considering your desire to support him, I suggest you to give him NOC subject to putting a condition in NOC itself that 'tenant has assured you that there is no legal breach of any law in India by the tenant said business conducted in your house and if any such breach is found or otherwise, you will withdraw said NOC so given and tenant will stop conducting such business from your flat immediately thereafter'.
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  • Big No to such proposal .
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  • Can I Run My Business In My Residential Flat?
    Please go through this link for better answers.
    https://sahakarayukta.maharashtra.gov.in/site/Forms/FrontofFAQs.aspx
    19 Whether a member can utilize residential place for commercial purpose?

    For utilizing entire residential place for commercial purposes means to change in utilization. And it can be done by prior permission of the committee. In the development rule there is a provision that members are allow to utilize some percent of his residential place for the profession based on their professional education (C.A., Advocate, Doctor, Engineer, Architect etc.). For this no need of prior permission of the society.
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  • Originally Posted by vaibav123
    In the development rule there is a provision that members are allow to utilize some percent of his residential place for the profession based on their professional education (C.A., Advocate, Doctor, Engineer, Architect etc.). For this no need of prior permission of the society.


    It is really surprising in DC rules that professional like C.A., Doctors, Advocates where lot of visitors, clients , patients visited daily are allowed to run business in residential building. In many road facing residential buildings in main city has doctors clinics, CA's offices so we face parking and other issues due to daily visitors , clients to such offices.
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  • sandy_pune,
    I have quoted the rule position for information of all.
    Our city planning is not all that good and we have lower standards-parking problem,congested roads are part of our life.
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  • Thanks guys , with all these reply and links , I think there is no issue for online business setup at Flat , as nobody gonna visit it.I am issuing NOC to tenant with a note saying " all legal issues shld be taken care by him and its his responsibility o ensure he has all the permissons..."
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  • Pune_kar: Suppose the business cheats people, renter runs away, and people make a crowd in front of you, local parties doing protests in front of your house. Will it be ok with you? Business should always have a proper address, otherwise your house address will be registered as the business address.

    I never give permission for such activities to my tenants. I want only normal tenants, ambitious or extraordinary ones can find suitable houses/landlords. I will suggest you not to permit such thing, no matter how noble the intention. The risk far outweighs the benefit.
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  • he must be needing it to register for shop act - residential property address is allowed for shop act license.
    Shop act license is needed to open bank account in the name of business so that you can integrate payment gateway to that account - payment gateways are not allowed on personal accounts.

    Check what business he wants to do, you can give him restricted permission stating - only for so and so business which will run in so and so fashion - also put a statement in NOC that under any circumstance owner of property is no where to be included in any kind of activity, liability, business, service, fine etc. Providing this NOC on the request of tenant as per so and so banks requirement for account opening and should be used only once and only for opening bank account in so and so bank.
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  • The question put forth by Pune_kar was whether NOC is required for home internet online business.
    Legal position is that there is no bar on such activities.
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  • Yes and the answer is - you need bank account in the name of business for which you need a shop act license (even if business is online) - and to get shop act license you need address proof - for rented premises you also need owners NOC.
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  • Tell him to accept payment via paypal. It will save hassles to everybody
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  • Originally Posted by himanshupant
    Tell him to accept payment via paypal. It will save hassles to everybody


    Yes, currently paypal is only option to receive payments from abroad 'online' to a personal/individual account - but their rates of commission are high.
    Again, with paypal, you cannot give the feeling of integrated gateway where user can trust more by seeing that your site is carrying out the transaction.

    For indian (in land) payments, he can ask users to used NEFT/RTGS - many small businesses are using above two ways (online deposit and paypal) to get the money.
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