Consider Zoning When Purchasing Real Estate
A business may be on the market to acquire real estate for a variety of reasons. For example, it often becomes necessary to move into a new office space to accommodate ongoing expansion, plan for future growth, relocate for strategic reasons, or downsize and eliminate unused space. The process of searching for and purchasing real estate can be daunting. However, working with a real estate attorney to consider the implications of property zoning and address potential issues and obtain necessary variances and permits in advance can avoid hassles down the road and allow a business to flourish in its new space.
Zoning refers to the local laws regulating the allowable use of a property in certain areas. For example, a property could be zoned for residential, commercial, retail, industrial, or some other use. In Indiana, real estate within the city limits is governed by the city zoning ordinance, while property not within city limits is subject to the county zoning ordinance. The applicable zoning ordinance may prohibit certain types of development for a variety of reasons, such as to prevent environmental contamination or to preserve the historical character of an area.
A prospective purchaser should be aware of whether the current zoning of the property permits the intended use. Even if the property is currently being used for the prospective purchaser’s intended use, such use could be non-conforming with the zoning ordinance, and the non-conforming use may or may not transfer to the new owner with the land. Accordingly, understanding what uses and types of development are permitted, and what is prohibited, is essential to ensuring that a business will be able to use the property as planned.
In addition to governing the use of the property, the zoning ordinance can regulate the site plan and architecture of the buildings and other structures on the property. Different zoning districts have different requirements for setbacks, the appearance and height of buildings, parking, types of light fixtures, landscaping, signage, and a variety of other issues.Complying with such requirements could involve a significant investment of time and money. Taking zoning into account early on will allow a purchaser to avoid being surprised by hidden costs and delayed timelines.
The zoning of the surrounding properties and the nature of neighboring businesses should also be taken into account. For example, a property may appear ideal for a new office space and be adjacent to undeveloped land. However, if it turns out that the adjacent properties are zoned for industrial use, a noisy manufacturing facility could be constructed in the future after the business moves into the new office space. This is just one example of how being unaware of potential future development in the surrounding area could end up impeding a business’s operations or diminishing property resale value.
As described above, the zoning ordinance can create significant legal restrictions on what a property owner can and cannot do on the property. However, there are also procedures in place for obtaining permission to use the property in a manner that is not provided for in the zoning ordinance. Obtaining such permission often requires that certain legal tests be met and approval be obtained from the relevant zoning officials, typically accompanied by a public hearing. Enlisting legal counsel early on in order to analyze whether your proposed property use complies with the applicable zoning ordinance and to assess your options for obtaining any necessary permits, variances, zoning changes, or other approvals is key to ensuring that the property will meet your needs and avoiding unanticipated and expensive issues down the road.
For questions regarding this article contact a member of the Real Estate team at Barrett McNagny.