Zoning due diligence plays a critical role in every commercial real estate transaction. Whether you’re a lender, insurer, or buyer, understanding zoning regulations helps minimize risk and ensures your investment is smart, secure, and profitable. While zoning laws can be complex, certain questions consistently arise. Below are some of the most frequently asked questions from our audience during Partner’s Zoning Reports 101: Latest in Zoning Research Best Practices.
Q1. Why do many municipalities decline to issue zoning verification letters? Is this part of a broader trend? Without such a letter, development can be significantly hindered. What alternatives exist when a municipality refuses to provide one?
A1. While many municipalities issue zoning verification letters, there are several across the country that do not. This can be the result of a few factors, including a decision made by their legal department on what information can be disclosed to the public, or a shift in personnel, priorities, or resources for the municipality. When this occurs, confirmation of the zoning designation can often be obtained through verbal confirmation or an email from the municipal official. A public records request can also be helpful in these instances to obtain any approved entitlements that a Zoning Letter would have brought to light.
Q2. Is “grandfathering” a formal process that includes written assurances, or is it typically informal, where authorities simply indicate that enforcement won’t be pursued?
A2. The policies and procedures for determining the legal nonconforming status of a property will typically be outlined in a municipality’s code. There are many municipalities that will confirm this information in writing. The onus will be on the property owner to provide evidence that the property was compliant with all applicable code requirements at the time it was built.
Q3. Does a zoning report require a property condition report, seismic risk assessment, and existing ALTA survey?
A3. No, a zoning report can be ordered as a stand-alone service. It can be issued draft or final without review of an ALTA Survey, if needed. However, to obtain the most accurate information possible from a zoning report, an existing or updated ALTA Survey should be provided to your zoning consultant as early in the engagement process as possible.
Q4. What factors influence a zoning decision maker when revising zoning legislation? For instance, what considerations come into play when a Euclidean zone is changed from multifamily to retail use?
A4. Zoning laws evolve based on several factors, including the prevailing national planning trends of the time, the welfare of a community, and the objectives set by a municipality for future land development and population growth. In Euclidean zoning, there is often more rigidity around what types of uses are permitted in specific land areas within the municipality. There are also instances when municipalities adopt a new or updated zoning ordinance, and certain land areas may need to be rezoned as part of the implementation process. When this occurs, landowners may receive a notification from the municipality that their property is scheduled to be rezoned, and there may be a grace period to appeal the decision before it takes effect. Every municipality interprets and applies the provisions of its code differently, so it is best to verify the rezoning process with a municipal official when needed.
Q5. If a building permit is mistakenly issued for a design that does not conform to the zoning ordinance, which prevails—the permit or the zoning regulation?
A5. If a discrepancy arises after a building permit is issued in error, the permit holder should consult with the municipality before proceeding with any proposed work. If the project is completed, then it is important to bring the oversight to the municipality’s attention and see how they would like to proceed.
Q6. Why do zoning reports often take so long to complete? In my experience, delays are frequently attributed to waiting for responses from municipalities. Is this a common issue, and what can be done to expedite the process?
A6. A municipality’s top priority is serving its community. Response times from municipalities can vary depending on their internal policies and how quickly they typically process requests, and the resources available to them. Even with consistent follow-up, it can take a significant several weeks to receive the necessary municipal responses and the subsequent final report.
Q7. What happens if an updated zoning report is needed due to a delayed closing or other timing issues? How is that typically handled?
A7. The policy for updating zoning reports will vary based on your vendor, your lender, and the transaction type. A report that is more than 6 months past its issuance date should be refreshed with new code violation responses and a new or amended Zoning Verification Letter.
Q8. When do you recommend getting a zoning verification letter versus a zoning report?
A8. A zoning verification letter will confirm the zoning designation of a property, and depending on the municipality’s policy, will also include a list of approved entitlements. The zoning report is more comprehensive; in comparison will give you a complete picture of your property. The report will provide a use and improvement conformance status and also speak to the feasibility of site restoration for legal nonconforming structures and uses, as outlined in the municipality’s code.
