(a) In this section:
(1) "Business" has the meaning assigned by Section 1.002, Business Organizations Code.
(2) "Home-based business" means a business that is operated:
(A) from a residential property;
(B) by the owner or tenant of the property; and
(C) for the purpose of:
(i) manufacturing, providing, or selling a lawful good; or
(ii) providing a lawful service.
(3) "No-impact home-based business" means a home-based business that:
(A) has at any time on the property where the business is operated a total number of employees and clients or patrons of the business that does not exceed the municipal occupancy limit for the property;
(B) does not generate on-street parking or a substantial increase in traffic through the area;
(C) operates in a manner in which none of its activities are visible from a street; and
(D) does not substantially increase noise in the area or violate a municipal noise ordinance, regulation, or rule.
(b) The governing body of a municipality may not adopt or enforce an ordinance, regulation, or other measure that:
(1) prohibits the operation of a no-impact home-based business;
(2) requires a person that operates a no-impact home-based business or that owns the property where the business is operated to obtain a license, permit, or other approval to operate the business; or
(3) requires a person that operates a home-based business or that owns the property where the business is operated to:
(A) rezone the property for a non-residential use; or
(B) install a fire sprinkler protection system if the residence where the business is operated consists only of:
(i) a single-family detached residential structure; or
(ii) a multi-family residential structure with not more than two residential units.
(c) Subject to Subsection (b), the governing body of a municipality may:
(1) require that a home-based business be:
(A) in compliance with federal, state, and local law, including:
(i) a municipal fire and building code; and
(ii) a municipal regulation related to:
(a) health and sanitation;
(b) transportation or traffic control;
(c) solid or hazardous waste; or
(d) pollution and noise control;
(B) compatible with the residential use of the property where the business is located; and
(C) secondary to the use of the property as a residential dwelling; and
(2) limit or prohibit the operation of a home-based business that:
(A) sells alcohol or illegal drugs;
(B) is a structured sober living home; or
(C) is a sexually oriented business as defined by Section 243.002.
(d) This section does not prohibit:
(1) a person from enforcing a rule or deed restriction imposed by a homeowners' association or by other private agreement; or
(2) a municipality from adopting or enforcing an ordinance regulating the operation of a short-term rental unit.