Hello,   Currently researching on a property to make an offer. It is actually a duplex property, but the records show it as land use being "Industrial".  This is in MA. 

Both units are occupied. What are the implications of continuing to rent out these units as residential units? What happens if I get into a situation that I have to evict, and this being not residential? Seeing this kind of issue for the first time. Appreciate your advise. 

Thanks, 

Naveen. 

Naveen,

Based on my experience, this is called legal non-conforming. The duplex was built before the city changed its zoning. Therefore, it is legal to keep its current use, but it is no longer conforming to the new zoning. In the event that the duplex got burned down, you will have to reconstruct a new building for industrial use. Rebuilding a duplex would not be allowed. However, you can still remodel the duplex like for like. Adding or modifying the duplex would not be allowed. 

@Naveen Desai  

Do give your zoning by-laws a very through read.   Sometimes a zoning of industrial, while permitting industrial use, does not actually forbid other uses.   As an example, there is a new 7-story condominium next to one of our properties.  The lot was zoned industrial/warehouse and formerly held a NAPA Autoparts store.  

It turned out the "old" zoning did not forbid the construction of office or residential on the lot.  Furthermore, the industrial zoning did not contain the 30m (3-story) height restriction that the rest of the neighbourhood carries.   This enabled the builder to construct the 7-story condominium.

That Canadian has the right idea, LOL.

Zoning is accomplished based on restrictive uses under police powers (Ooops, basic RE stuff) categories or zoning areas are set from a highest use or restriction to the lowest restriction. The highest restriction is single family homes, the activities allowed in residential areas are the most restricted. The lowest will be industrial, the lowest restrictions as that may allow noisy, smelly, smoggy, factories.

Generally, an owner (or tenant) may use a property for activities that have higher restrictions in a lower restricted area, but you can't use a lower zoning use in a higher restricted area. You could build or have a residential use in an industrial area, but you can't have an industrial use in a residentially zoned area.

Within each category, residential, commercial-residential, retail, office, warehouse, then industrial-light, medium, heavy and agricultural as well as public use, recreational, etc. have sub categories.

As mentioned above, you will have legal, non-conforming uses, zoning may have been changed, or a special use permit may have been granted or it could be that the higher restricted use is allowed in a lesser restricted area.

It would be prudent to check with your zoning office to see exactly what the status might be. An area can be annexed by a municipality and the current use allowed as it is "grandfathered" but if the property is sold or the owner stops using the property, new zoning requirement may be need to be met. I bought a farm inside the city (really inside), had been a farm for 100+ years, the lady kept 3 calves just to keep the agricultural status for a lower tax rate! When we moved them off, 6 months later the existing zoning prevailed.

This is an matter of "basics of RE" I always hammer about, the utility of properties. Knowing zoning, highest and best use, current uses and differences in valuation can make you a heck of a lot more money. A good reason to study real estate! (Money is made by changing the use in a zoned area to a higher and better use, not higher or lower restriction so much, but a higher use). See Roy's example.

In your case, the duplex, (R2) will not likely be an issue. If you are financing it, the appraiser will need to state the zoning and that the use is permitted AND that such use is common for the area! Common for the area is key!

If it is not common, that effects marketability, there would be external obsolescence that will reduce value, who wants to live near a stinky factory, or where a factory could be built? Might keep that in mind. And, if you think the asking price is great, that is probably why! :)

Hello,   You all are awesome!  

    Thanks for all that wonderful info. 

However none of you touched upon the point of what happens if I have to evict people in there. I take it that since it is a higher use, all the residential laws apply ( will confirm with an attorney). 

Thanks, 

Naveen. 

@Naveen Desai  

I didn't tackle the eviction portion of your questions as I really didn't see it as an issue.  If you purchase the property with tenants, it is unlikely the zoning will force the building to be vacated due to the sale (when you check the zoning details, you can verify this) ... if it does, then I would let the vendor take care of that (make it a condition of sale). 

If you want to remove the existing tenants, you will have to abide by the current leases and serve the appropriate notices of termination to end each of the leases.