I want to inform you of an issue that I, as a buy and hold landlord and former zoning official, have been seeing pop up again and again as the effects of the real estate bust linger on.\u00a0 This is the issue of the non-conforming use.\u00a0 A non-conforming use can quickly turn a great deal into a nightmare for the uneducated investor.<\/p>\n
First, some background…. most jurisdictions in the United States have some form of zoning<\/strong> regulations in place.\u00a0 Zoning can regulate many things but for our purposes, I just want to focus on the regulation of land uses.\u00a0Zoning limits or restricts the use of land.<\/strong>\u00a0 Certain zones may only permit single-family dwellings and thus forbid apartments and commercial uses. Or the opposite may be the case.<\/p>\n Many older communities have areas that were developed before zoning was in place. Often times these areas contain a mix of uses not found in more modern areas.\u00a0These older areas may have tri-plexes next to single-family homes which are next to the corner grocery or caf\u00e9, etc.<\/p>\n The issue lies in the fact that most zoning codes are very rigid and were put in place after<\/span> these areas were developed, and thus do not recognize these mixed uses.\u00a0 So a mixed use area could be zoned for single-family only.\u00a0 This does not mean that a tri-plex in a single-family zone has to stop being used as a tri-plex.\u00a0 The tri-plex becomes what is called a legal non-conforming use<\/strong> and becomes grandfathered<\/strong>.\u00a0 Because the tri-plex predated the zoning regulations, it can legally continue to be used as a tri-plex as long as that use continues uninterrupted<\/span>.\u00a0 There is the catch!<\/p>\n Non-conforming uses are only grandfathered as long as they are in continuous use.\u00a0 If they sit vacant for a set amount of time or the use is changed, the legal non-conforming status is lost.\u00a0 After that, any structure or use has to comply with the zoning code.<\/p>\n The real estate bust has exacerbated this issue.\u00a0 Owners abandon underwater properties, tenants leave and the banks may take months or even years to foreclose.\u00a0 These periods when the property sits vacant and unused may cause the loss of the grandfathered status.<\/p>\n Imagine you have found a four-plex.\u00a0 It is a bank foreclosure.\u00a0 It has sat vacant for more than a year and it needs extensive repair.\u00a0 You negotiate a great price due to these factors, then close and are expecting great cash flow.\u00a0 However, when you go to turn the utilities on, code enforcement tells you they can only turn one unit on since the four-plex has lost its grandfather status after sitting vacant for a year.\u00a0 It can now only be used as a single-family dwelling.\u00a0 There goes your cash flow!<\/p>\n Now What?<\/strong><\/p>\n After you get over that sinking feeling, you can try and get the property rezoned.\u00a0 But rezoning process is expensive, lengthy and even worse political.\u00a0 All your neighbors may hate apartments and will come out to the public hearing to fight you.\u00a0 You may just be stuck with a very expensive problem.<\/p>\n How can you prevent this?\u00a0 There is no set zoning code.\u00a0 Codes differ from place to place.\u00a0 If you invest in older parts of your community like I do, you need to be aware of three things before you buy a property:<\/p>\n All of these can be found by calling your local code\/zoning office and utility company.<\/p>\n Here in my jurisdiction for example, the time period is one year.\u00a0 So if I find a non-conforming four-plex that has had the utilities turned off for over a year, I either do not buy or make a very low offer.\u00a0 I explain that the offer is so low because I have to convert the property into a single-family home.<\/p>\n Do not expect the banks to be aware of this potential problem.\u00a0 Many realtors are also unknowledgeable when it comes to zoning complexities.\u00a0 It is incumbent upon you to check these things out with your local codes and utilities offices before you buy.\u00a0 Code enforcement will be very unsympathetic to your plight if you get yourself in a mess.<\/p>\n I hope this article saves someone a load of trouble down the road!\u00a0 Happy investing!<\/p>\n","protected":false},"excerpt":{"rendered":" I want to inform you of an issue that I, as a buy and hold landlord and former zoning official, have been seeing pop up again and again as the […]<\/p>\n","protected":false},"author":726,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[4235,4236,59,1104],"class_list":["post-29030","post","type-post","status-publish","format-standard","hentry","category-real-estate-investing-for-beginners","tag-grandfathering","tag-non-conforming-uses","tag-real-estate-investing","tag-zoning"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/29030","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/726"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=29030"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/29030\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=29030"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=29030"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=29030"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The Issue: Rigid Zoning Codes & Non Conforming Use Limitations<\/h2>\n
Protecting Yourself<\/h3>\n
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