This post promises to be a short one. It could be much longer because I could cut and paste any number of sections from any number of municipal zoning codes to make my point.  But I won’t.  I will state my case succinctly.

As a real estate attorney, it is necessary for me to review local zoning ordinances often. Whether it’s to confirm the use of an existing building a client wishes to lease or purchase or to determine what can be built on a vacant parcel of land, it is important to be able to look at a zoning code and answer questions quickly.

However, most zoning codes are not user friendly. In fact, they are not written using proper English as most of us were taught in high school and college — or elementary school for that matter.  Grammar, punctuation, sentence structure and syntax are not used properly.  Cross references are confusing at best and are often wrong.  Definitions of terms would make Meriam Webster cry.

Most times, the answer can’t be properly determined from a simple reading of the zoning code. Therefore, it is often necessary to call planning and zoning staff for clarification.  And, you know what, many, not all, but many times, staff can’t answer the question.  They need time to “research”.  That means they need to discuss the question with a manager or city attorney because the code makes no sense to the people employed to interpret and enforce it.

Somehow, we fight through this language problem. We figure out what the code says or is supposed to mean.  We apply for approvals, variances, re-zonings, permits and site plans.  Then later, we try to draft new ordinances in proper English.  But somewhere down the road, a new zoning code will be enacted.  Unfortunately, it will be drafted in the same old zoning code language (are you listening Miami 21?).

Selecting the right property to buy or lease can be tricky. Every one knows the old adage “location, location, location”.  Clearly, location is crucial to every one involved in a real estate project from brokerage to development to construction; from lending to investment; from management to leasing, location will be a crucial factor in everyone’s return on the investment in real estate.  However, a corollary to location is zoning, zoning, zoning.  A property that does not have the proper zoning and land use designation for the proposed use, and one that can not be appropriately re-zoned, or variances obtained, will have no value to a buyer, developer, tenant or investor and location will add no value.

This rule applies to properties that are being purchased or that are being leased. A retail location might be the best spot in town for your client’s hot new night club.  But zoning might not allow any business which serves alcohol to be located in that location because a church is located within 1000 feet.  Or, noise regulations prohibit music after 10:00 because of the hospital across the street.   These are some of the things that should be considered even before entering into a contract or a lease.  They can save time and money.

When purchasing a property, it is a good idea to have preliminary, exploratory conversations with city planning and zoning staff to discuss the site. This is a good way to learn what the city would be comfortable with.  The meeting will help the buyer understand what approvals will be necessary for the project and will assist in formulating a timeline for obtaining approvals.

Upon preparing the contract, the buyer should make the obligation to close contingent upon obtaining the necessary approvals. The approvals can be specific, but I like to keep them as generic as possible.  For example, I define “Approvals” as all approvals necessary to enable buyer to obtain building permits to construct the Intended Improvements.  When pushed, I will list approvals to include, without limitation, zoning, land use, platting, site plan, and I will expand as necessary.

Many times, going into the contract, the parties know precisely what zoning is going to be required, or the seller has already begun the process of re-zoning in anticipation of a sale for such a use. This should not affect buyer’s contingency as the use drives the value of the property and must be in place prior to closing.

Zoning diligence before contract can make negotiations smoother and faster. It can also help buyers and sellers set a realistic price for a property, particularly because with proper approval contingencies, buyers won’t have to close if the zoning is not sufficient for the intended use.  But patient sellers will be more likely to get their desired price.

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