What the Housing Bust Can Do to Nonconforming Use
Posted by Peter Vekselman Tuesday, 31 July 2012 06:39 No Comments
I imagine this article title sounds strange, so let me explain. Nonconforming use refers to real estate zoning regulations. It applies to real estate that has a grandfather clause because a new zoning ordinance was passed that it does not conform to. The new clause may only allow single-family homes but before the new zoning, a fourplex and a couple of triplexes already existed within the zone.
New construction can only be single-family houses but owners don’t have to tear down an existing nonconforming structure. Instead, the structure is allowed to continue operating as it did previously.
Zoning regulations vary greatly across the country so this may not even apply to your location. But if it does, you’ll be glad you heard it here.
Because of the real estate bust, there are vacant properties everywhere. Not all of them are single-family homes. There are plenty of tiplexes, fourplexes, and apartment buildings sitting empty.
Some locations have very strict regulations and grandfather clauses. Many allow the nonconforming use only if the property is in continuous use. The grandfather clause can lapse if the property sits vacant for a set amount of time. The length of time varies just as zoning regulations do.
Imagine you decide to invest in a foreclosed fourplex. You negotiate a great deal because it needs repairs. To your mortification, the day after the deal closes you go to the utility company to have the power turned on and they tell you they can only turn on one unit because it’s been vacant for more than a year and is now zoned single-family.
Now that great investment that was suppose to cash flow won’t. You could go to your local zoning office and ask to have the grandfather clause reinstated. Maybe they will or maybe they won’t. More likely they’ll hold a public meeting to see what concerned citizens want. Maybe no one will show up at the meeting. Or maybe a bunch of angry neighbors don’t want it used as a fourplex because it was a drug infested nightmare before.
Here is what you need to know when there is a chance a building you want to buy has a nonconforming grandfather clause:
1. The current zoning for the area.
2. The conditions that cause it to lose any nonconforming grandfather clause.
3. The length of time the building has been vacant .
The first two you learn by calling your local zoning authority. The third you learn by asking how long the utilities have been turned off.
All the Best,
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