Understanding potential uses of real property is valuable information. With this information, for example, you may confidently pay a premium for a single family home knowing you can build a multi-family rental property in its place. However, you must determine your rights to redevelop the property by examining land use restrictions such as municipal regulations, including zoning and environmental regulations, rights of access to the property, and lease restrictions.
Zoning regulations may restrict use of the land to residential or commercial or require zoning board approval of your intended uses. They may also limit the dimensions of a proposed structure to a particular land area on the property and define minimum width for access to the property. A title examination and survey will identify an owner’s rights of access to the property. Leases may limit the landlord’s rights to develop the property with restrictions for tenants.
Any number of land use restrictions could delay your project, increase your carrying costs and create uncertainty about your intended redevelopment plan. If land use restrictions apply, you may own property worth less than the amount you paid for it.
4 Essential Land Use Due Diligence Items 12
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