You can put the blame for the concept of restricted land use and zoning laws directly on the Manhattan skyline. Almost a century ago, in 1915, when the Equitable Building’s 42-story shadow cast almost seven acres of land into perpetual gloom, New York City residents started complaining about property devaluation (and haven’t stopped since). A year later, the first zoning laws were enacted, and have since changed numerous times to accommodate an ever burgeoning populace.
The real estate investor who does not know or understand the zoning laws for the area in which the investment or rental property lies does so at his own risk. Laws vary broadly from city to city, even within the same county. The intention of zoning laws is to help property owners and their tenants to peacefully co-exist, with the full backing of the law.
But zoning laws can and do change over time, and an investor should understand that what a tenant may or may not legally do today, may not be the case in the future. In some instances, the misbehavior of your renters, especially if you are the owner of a multi-dwelling complex, can generate complaints to zoning officials, resulting in changes to the existing laws. You, as the property owner, have the obligation to ensure and enforce the applicable zoning laws.
What you can do:
First, be aware of the zoning laws yourself. Contact the local planning board, and get a copy of the statutes, even before you purchase a property for rental usage.Consider how possible changes to the zoning laws might affect you.
Second, clearly understand the demarcation of zones; as urban sprawl continues to spread, you may find that a potential rental property complex is actually in a zone designated for commercial use. That may be a risky investment; if it was brought to the attention of the Planning Board they have every right to deny its continued use as a residential property. While you might think you can apply for a variance after the fact, the big “what if” should be foremost among your considerations.
Third, advise your tenants, in writing, that the property is zoned for residential occupancy, and a home-based business may not comply with the zoning requirements. All tenants should seek permission from you first, and not just assume that because they’re “quiet or won’t bother anyone,” that it wouldn’t be a problem.
Fourth, zoning laws are not written in stone; there are circumstances which may warrant a variance, which is an exception to the existing law, or for an application for zoning change. The approval of a variance to existing zoning laws is generally simpler to obtain, usually requiring only a statutory review of the specified criteria.On the other hand, a zoning change application is a lengthy procedure, since you are suggesting that the highest and best use of the property is other than the one it’s designated for. The appeal for re-designation may test the resources of the property owner, both in terms of time and money. Under either the request for variance or the zoning change, a property owner should be prepared to argue his point in front of a public hearing of the planning board, and be ready to refute any opposition.
Residential zoning laws can be a major obstacle for property owners and investors, but provided that you’re aware, up front, of what you can and can’t do with your property, you won’t be caught in a property zoning nightmare. Property owners must be proactive with respect to the zoning laws, and should bear in mind that what they assume to be the legal permitted use of a particular, potential investment property, may in actuality be an illegal use of the property. That wonderful duplex you visited at an open house, and have your eyes (and hopes) set on, may be zoned for single family dwelling. The onus is on you to verify that information before you buy. “I didn’t know,” won’t carry much any weight, with the local zoning board.