Before proceeding to any action, I would like to receive professional advise on zoning issue below:
I purchased property located at Las Vegas on July 2nd, 2015 as traditional sale through MLS. Property was listed and sold as SFR (Single Family Residency) home with no official documents reflecting otherwise. Furthermore, seller signed disclosure stating home as residential property.
On Tuesday Oct 13th, 2015 my residential designer and I went to Clark County Department of Development services to clarify some design features of the house. My designer had a list of questions with one of them especially concerning about zoning. A day before he found some controversial information on County website that house could belong to commercial zoning. Official confirmed his finding and showed documents stating that property is zoned to C-P (Commercial-Office & Professional). This information was verified and confirmed the same day by Department of Comprehensive planning (Land Use Planning).
Further investigation by official at Land Use Planning showed that house was converted to commercial zoning with request officially approved on July 3rd, 2012. Additional information showed that seller, who owned property since June 16th, 2011 presented plan approved for conversion of SFR to a 3 story office with parking.
Interestingly, neither broker nor title insurance didn't disclose commercial zoning information and facilitated closing transaction as SFR home. Note, that house is located in between two commercial parcels, but that was one of the selling points that I liked (no neighbors in the evenings, which is good for parties for example, not dogs etc). Obviously listing & selling brokers/agents never researched zoning since assessor website still showing "Land use" as SFR and even taxes had been paid as residential. Again, property is located between two commercial parcels, second from major street, there are six properties in one cluster: 2x3 (total 6) and only 2 of them currently zoned for residential & 4 commercial including mine.
Thus, I have a feeling that product was completely misrepresented and I wouldn't ever willfully buy commercial property. House has been vandalized in the past and in need of complete renovation. As stated above, I've owned it for over 3 months and experienced numerous losses due to fact that my residential renovation plans are not going be approved due to improper zoning. Plus I am paralyzed with indecision whether to change zoning back to SFR and complete the project.
I would appreciate if you could share more information on a few questions:
1) Whose responsibility to check zoning? What is possible resolution in this matter?
2) If you know of law suites filed against dishonest sellers, who usually wins the suite?
3) Were brokers/agents supposed to verify zoning information?
4) What are the chances of rezoning back to residential, if any? Is it even worth trying?
5) Considering house is surrounded by 3 commercial properties is it worth trying to sell as commercial (C-P)?
If you are looking for "professional advice", you are in the wrong place. BP forums does not constitute "professional advice". Would recommend hiring a RE attorney for this.
The following is NOT professional advice:
1) It is generally the buyer's responsibility during their due diligence period to verify zoning. The title company would not pick this up as zoning has nothing to do with chain of title.
2) It comes down to what you can prove. If the seller actually was the one that rezoned the property, then I think you have a very strong case of misrepresentation. However, see my point below...
3) If you read all your contracts, I'm sure somewhere in there is the language "buyer to verify all...". Essentially this says the agent/broker will not be responsible.
4) If what you say is correct, that the property is on busy street in between commercial properties, then I would say your chances are low for rezoning back to residential, seeing how they just approved a few yrs ago for commercial zoning.
I find this situation interesting and I'll follow this thread in case someone with more knowledge knows. I believe marketing and selling as a SFR is not fraudulent, as the building indeed is a SFR. It is a true statement. The use of the property as a SFR is usually grandfathered in due to the zoning changes. However it does limit any further development of the land for SFR if it's not zoned residential. So technically the property is not a commercial property...it just happens to be zoned for commercial.
Daniel, thanks for your inputs. Assessor, Treasurer & recorder all show property as residential, but only County building Dept knows it is zoned for commercial (but never been used as such). So I'm still not clear. In your opinion:
Do you think County will reject my residential remodeling plan and check zoning before consideration?
Does it mean I can sell it as residential or commercial?
Take what I'm saying with a grain of salt, as I'm not entirely certain. Again, hoping someone with more knowledge can weight in.
Zoning is usually city matter if the land is within the incorporated city. Your property must be located outside Las Vegas city within Clark County. In that case, you would pursue zoning changes with the County. In typical zoning changes, the city/county looks at the proposal for a variety of factors but most importantly, does it fit with the master plan and if it makes sense. Obviously if you try to get a land changed to industrial in a middle of a residential neighborhood, you would get denied. So in general, for them to have approved that location from residential to commercial means it is much less likely for them to go backwards. That area is probably now more suited for commercial development.
This situation would commonly be marketed as a "redevelopment opportunity" of a SFR sitting on land that is zoned commercial. This is where it gets murky and every city/county has different laws. But I believe generally that the property can still serve as residential (meaning you can rent it to residential tenants) despite it's commercial zoning. In order for a business to lease it out as commercial, it would require certain upgrades of the building to meet code (fire sprinklers, fire doors, etc.).
The principle is such that if you were to completely bulldoze the building, you would not be able to build the same building in its place as the county unlikely to approve a SFR in commercial zoned lot. It just depends on what kind of remodeling you plan to do. No way to truly know other than check with the county.
I also advise you talk to a commercial RE broker in the area as you may be sitting on an opportunity to sell it as a "redevelopment opportunity". It just depends on how much you paid for it and how much it's worth as a redevelopment.
@Alexander Parunin as others have stated
1. title company does not check zoning.
2. read your original purchase contract and the listing if it was MLS many times the listing agent will put in their that buyer is to do their own due diligence and seller makes no reps or warranties.
3. on the surface if you saw it was between two commercial buildings I think a prudent thing to do before you closed was to do what your doing now.. up front not after the fact. Much of this comes down to what would a reasonable educated person do when looking at the property.
4. Might not be that hard to get it rezoned explore that.
5. you could hire an attorney but check your Purchase and sale contract if Nevadas are like Oregon you have to go to mediation before you can sue in a court.
a thorough reading of your purchase and sale contract and the MLS listing is in order here I think.. then make a decision.. Now it could be a matter of going after the broker who then turns it over to his E and O carrier . But you know the old adage the only one's who win in a lawsuit is the attorney and that is a fact. Unless this seller is very deep pocketed and their is something to get from them or the E and O can be snagged
@Alexander Parunin I have no pro advice here. I did see a couple of these properties in Vegas. That is SFRs on busier streets and in or bordering commercial. I thought the future value as commercial use was where all the forced appreciation was going to be as compared to the residential as is. A few commercial renters are looking for a live work spot too. Not as official residences, but they live there....doing classic cars or what have you. I do see these type of properties as Dentist or Vets etc.....Good luck!
Updated about 6 years ago
Tax preparations, hair salons, pawn shops, studios, the list is endless in LA for these types....also usually the residential use is granfathered it seems. The living there sometimes is pegged as 24 hour security vs official residence.
Why don't you amend your plans to have a small very small office as some type of business you create and then build your home should not be too hard
Usually commercial is worth more than residential . I would be happy with the commercial , but thats me
lawsuits are very costly and what would your actual damages be? and as mentioned you do have responsibility for due diligence just because a seller might be guilty of wrongdoing your damages might not exceed your legal fees
Depending where the property is located, the highest and best use could turn out to be commercial. My advice would get with a commercial agent that knows what they are talking about and get their advice on what the property could be renovated and how much expected income could be etc. If you don't putting up the address I'm curious where this is located and depending on location I can direct you to someone that might be able to help.
Sorry for the errors in my previous post as I'm posting from my phone.
@Daniel Chang and @jayhendricks have provided a rather comprehensive assessment of the situation so I won't address the issues they've already discussed.
I do want to add to the conversation by recommending you consider applying for a conditional use permit in combination with the submission of your existing improvement plans.
A conditional use permit would provide the use you seek, if approved, and at the same time retain the existing zoning, if it turns out that's the more desirable zoning. In many, if not most, circumstances a commercial zoning designation may be deemed to be the more desirable zoning and will drive a higher use value.
Okay. It is up to the buyer to conduct all due diligence and know what you are buying.
That said the property could be worth more as a commercial building than residential. I have made a few residential purchases in commercially zoned areas and just closed one where the commercial value is greater. If you email me the address I am more than happy to take a look at it. I may have missed this but did you purchase this house to serve as a personal residence or?