The Hedge | Brutal Honesty Over Hype Since 2008
The Hedge’s June series covered two seemingly separate topic areas — California business law and HOA governance — that intersect more often than most people realize. For California entrepreneurs who own their workspace, live in HOA communities, hold investment properties in HOA developments, or are building businesses that serve the HOA industry, the two bodies of law interact regularly and consequentially.
The Work-From-Home Intersection
California’s AB5 and the remote work normalization created a large and growing population of California entrepreneurs and independent contractors who operate their businesses from HOA-governed homes. For this population, HOA restrictions on home-based businesses — CC&R provisions prohibiting commercial activity, signage, client visits, or employee parking — create a direct conflict between their business operations and their HOA obligations. Understanding which home-based business restrictions are enforceable (most are) versus which cross the line into unreasonably restricting lawful activity (some do) is practical knowledge for every entrepreneur who works from home.
The Investment Property Intersection
California entrepreneurs who invest in real estate — a common wealth-building strategy for business owners who have generated capital — frequently encounter HOA restrictions that affect their investment strategy. Rental caps limit the ability to treat HOA properties as pure income investments. Short-term rental restrictions limit Airbnb strategies. Architectural restrictions limit renovation strategies. Reserve fund underfunding creates unexpected special assessment costs. The HOA compliance framework is not just residential — it’s a direct constraint on investment returns.
The Bigger Picture
California imposes costs and constraints on entrepreneurs and property owners that no other state matches. The $800 franchise tax, PAGA, AB5, the CCPA, and 518 regulatory agencies are the business side. Davis-Stirling, assessment liens, HOA election requirements, and the reserve study mandate are the property side. Both sides reflect the same fundamental California policy orientation: comprehensive regulation with strong private enforcement rights and significant compliance costs. The entrepreneur who understands both sides — and makes deliberate decisions about where to operate, what to own, and how to structure their affairs within this framework — builds more durable wealth than one who encounters these systems as surprises. That’s the purpose of The Hedge. See you in July.
The Hedge has been cutting through financial and business noise since 2008. Brutal honesty over hype — always.