By Stacey L. Shea, Esq.
When considering the purchase or lease of commercial real estate, there are a number of due diligence steps that one should take before committing.
One important step in the due diligence process is understanding the property’s zoning and if it aligns with your intended use. The current use of property being similar or identical to your intended use is in no way an indicator that the use is compliant with the applicable zoning code. Unfortunately, county and municipal agencies do not have the capacity to do periodic zoning compliance checks and rely heavily on reports of possible violations for zoning enforcement. As such, an existing use may be a violation of the code that has never been reported. Conducting thorough zoning due diligence will help to avoid costly delays, legal issues, or even the ultimate inability to use the property for your intended purposes.
County and municipal zoning codes dictate what types of activities or developments are allowed on a particular parcel. While there are general trends in zoning that are fairly consistent across various county and municipal codes, it is very important that you:
- determine the zoning of the parcel;
- review each of the sections of the zoning code that apply to that zoning district;
- determine if the intended use is allowed; and
- if the intended use is allowed, determine whether a permit will be needed for the use.
The first step is to obtain a current zoning map indicating the specific zoning classifications for the property and surrounding areas. If the map is unclear or questions remain as to the zoning of the property, a zoning report should be requested from the applicable county or municipality.
Once the zoning of the property has been determined, carefully review the applicable code sections, to determine if the intended use is a use-by-right or if a permit will be needed.
If the intended use is similar or the same as the existing use of the property, inquire with the property owner regarding the existence of a permit. If the owner is unsure whether a permit is in place, check with the applicable county or municipal planning office. For any existing permit, always obtain a copy and review each of its terms and conditions to understand the permitted uses and any obligations of the property owner as the result of this permit.
If there is no existing permit, continue to review the code to determine what the permit application process involves and what documents and fees may be necessary to apply. If the current zoning of the property does not allow for the intended use, an application to change the zoning of the property may be a solution.
If the next step is an application for a land use permit or zoning change, contact the county or municipality to schedule a preapplication meeting. This is an excellent opportunity to benefit from the experience of the staff and gain insight into the impact of any long-range planning or comprehensive plans before making a significant financial investment.
Zoning due diligence is a fundamental aspect of commercial real estate transactions. Understanding the zoning laws that apply to a property and working with local authorities will help avoid costly surprises or delays, and aid in planning for any necessary zoning changes. By thoroughly reviewing the zoning classification, codes, and any potential obstacles, you can make an informed decision and proceed with confidence in your commercial real estate investment.
