If most investors know one thing, it’s that zoning rules can stifle land usage, but there are methods to get around them. A conditional use permit, for example, allows for an exception to a municipal zoning ordinance.
The following is an explanation of how the conditional use permit function in real estate. Continue reading to find out what a conditional use permit is, how to obtain one, and why investors should consider jumping through hoops with their local planning board. With this information, you’ll be able to determine whether obtaining a permit for your investment property is the best course of action for you.
What Does a Conditional Use Permit In Real Estate Entail?
c This form of permit, in particular, allows the property owner to utilize the property in ways that do not comply with current zoning restrictions. Obtaining an exception for some conditional uses under appropriate criteria is frequently a more convenient option than completely rezoning the land.
When a property owner maintains a home-based business in a residential area and zoning district, this is the most prevalent example of a conditional use permit in residential real estate. However, there are numerous reasons why someone could seek to extend land uses or circumvent a zoning restriction. Notably, CUPs are frequently utilized in commercial real estate to permit the use of a certain zoning district for retail or industrial applications.
That being said, regardless of the reason for filing for the permit, it’s crucial to realize that a conditional use permit is not the same as a zoning variance. A zoning variance is specifically provided to allow the landowner to change the physical characteristics of the property. A conditional use permit, on the other hand, allows the landowner to utilize the property for a variety of purposes.
What Does a Conditional Use Permit Do?
A conditional use permit is intended to provide flexibility within zoning rules. A zoning ordinance cannot account for every circumstance, and exceptions such as the conditional use permit provide the zoning authority discretion to allow activities that are ordinarily forbidden in the specified district for the good of the neighborhood.
To bring commercial, educational, or religious services to residential zones, a conditional use permit is usually given. Churches, schools, and small or home-based enterprises in residential neighborhoods are all the result of a conditional use permit, which provides a zoning exception.
How Do I Get a Conditional Use Permit?
The applicant may begin the process of requesting the permit by calling or writing to the local zoning authority in charge of awarding the conditional use (with the assistance of an attorney). The process is explained by the local zoning officer, including required documents, notices to neighboring property owners, and fees. He can also tell the landowner what kind of opposition the conditional use would elicit, as well as what to do to prepare for challenges.
This information will be useful when the petitioner submits his petition to the zoning board. Before the official makes a decision, the proponent usually presents his request verbally and answers questions regarding his conditional use application process during the public hearing. Throughout the process, the property owner applicant must be prepared, adaptable, and available.
Conditional Use Permit Examples In Real Estate
A popular conditional use permit allows a home-based business to operate within a residential district. Conditions aimed to limit the negative consequences of this business on the district could include requiring vehicles associated with the business to park in specific areas (e.g., the home’s driveway) and limiting business signage. Another popular conditional use is a church within a residential district, with conditions to mitigate the church’s possible detrimental impacts (e.g., parking and additional traffic control improvements).
Conditions for Obtaining a Conditional Use Permit
A conditional use permit application, like the one above, must adhere to the zoning ordinance and comprehensive plan. In terms of the ordinance, this signifies that the desired use is specifically permitted as conditional in the subject district. When it does, the applicant accepts the imposed conditions, and all other ordinance requirements are met, the conditional use permit is granted as a matter of right. If the owner fails to comply with the terms, the conditional use permit may be revoked.
What Should You Do If Your Conditional Use Permit Is Rejected?
You still have choices if your CUP application is denied or if you are denied a CUP after your hearing. You may be able to appeal the decision to the property owner.
If you haven’t already, you should consult with a real estate attorney. They can assist you in reviewing the decision and determining the best course of action. A local attorney who is well-versed in conditional use permits can make a significant impact.
You may be able to acquire evidence that the nuisance issues or other anticipated difficulties will not occur. Perhaps another similar property is used in a different way, and you can demonstrate the benefits to the community.
Regardless, you will most likely have other options if the CUP is denied.
What if the Property Use Changes?
If you are awarded a conditional use permit and the use of the property changes, you must revise the CUP to reflect the new zoning changes.
If the change is severe enough, you may be required to get a new conditional use permit rather than making a change.
After a sale, what happens to the Conditional Use Permit?
Is it possible to transfer the CUP to another property if you sell the property? No, it does not. The conditional use permit can be transferred to the new property owner, who can choose to continue operating the zoning variant or restore the property to its prior use.
A CUP cannot be transferred to a new property; if you relocate your business or activity, you must select a property with the appropriate zoning or apply for a new conditional use permit.
Problems with Conditional Use Permit In Real Estate
An applicant may argue that the conditions imposed are overly restrictive and create an undue burden on his use of his property. Alternatively, people who oppose the granting of a conditional use permit may argue that the regulations are insufficient to protect against the detrimental effects of the usage.
Furthermore, if the conditional use permit is not in accordance with the ordinance, such as a problematic variance, it may be termed illegal spot-zoning.
What Is the Distinction Between a Conditional Use Permit, Rezoning, and a Variance?
Rezoning is the act of transferring a property’s use district to another district with zoning restrictions that allow the applicant’s requested use. Rezoning can be useful in a variety of scenarios. For example, if the city wants to replace an undesirable use with a more desirable use, it may begin rezoning to a district that prohibits the undesirable use. Furthermore, a property owner may demand a rezoning to change the use district to permit a new use that has become more appropriate as a result of the city’s development.
The rezoning application must follow the procedures outlined in the municipality’s zoning ordinance, such as consulting with city employees prior to application to address potential concerns and ensuring any application fees are paid, according to the approval requirements.
Moving on to deviations, a variance is a zoning requirement administrative, discretionary, restricted waiver, or modification. Variances are classified into two types: area variances and usage variances. An area variance is an exception to the district’s restrictions that allows the landowner to utilize the land in the same way as similarly situated owners who do not suffer from the land’s undesirable physical attributes. A use variance allows a landowner to use land that would otherwise be banned under the current districts. A variance application, like all zoning requests, must adhere to the zoning ordinance and comprehensive plan. Regulatory takings, spot-zoning, and “Not in my Backyard” (NIMBY) opposition are all typical zoning difficulties. A real estate expert must be familiar with common zoning terms in order to confirm that the current or prospective use of the property is permitted or how it may be permitted.
What is the Approval Procedure?
Let’s have a look at the approvals process. These three requests begin with an application to the city’s zoning officials. They engage with the applicant, explaining the ordinance’s restrictions and revising applications as needed to ensure compliance.
They engage with the applicant, explaining the ordinance’s restrictions and revising applications as needed to ensure compliance. Rezoning and conditional use permit applications are often sent to the planning commission. The commission is a resident advisory board that analyzes applications to determine if they are in accordance with the ordinance and the comprehensive plan.
Following the review, the commission offers a proposal to the municipal council, which approves or rejects it. After reviewing variance requests, the staff presents a recommendation to the board of zoning adjustment.
Read Also: WHAT IS A SYNDICATOR? Role of a Syndicator in Real Estate Investing
So, how do courts look at zoning decisions? Zoning decisions can be both legislative and administrative in nature. Legislative choices affect the entire society, not just a single property or individual, whereas administrative decisions affect simply a single property or people.
Although there are numerous considerations to consider when awarding a conditional use permit, the zoning authority will normally decide whether or not a proposed conditional use will fundamentally modify the area and whether or not the change will have a beneficial impact.
Even if the conditional use application is denied, the property owner may be able to appeal the decision. So, if you’re thinking about buying property but know it doesn’t comply with the city’s zoning ordinance, you should seek legal counsel. A local attorney who is experienced with conditional use permits and zoning rules can assist with the application and, if necessary, the appeal procedure.
What advantages can a conditional use permit provide to investors in real estate?
Now that you understand what conditional-use licenses are and how to obtain one, the next step is to discuss the advantages that a conditional use permit can provide for real estate investors. The main advantage is that a CUP increases the freedom with which the property may be used, which should increase the number of potential buyers or tenants.
An added benefit is that having a CUP might be a selling point. These permits, once obtained, remain with the property even if it is sold. If the governing body in charge of zoning in your town is notoriously difficult to deal with, and your property already has a CUP connected to it, you may be able to use that to negotiate a higher sale price or monthly rent.
Conclusion
At the end of the day, obtaining a permit is not always a simple task. Most zoning boards demand that any conditional uses benefit the community as a whole and that a detailed plan for these uses is presented at a public hearing. However, if you are ready to go through the hoops in order to obtain one of these permissions, it might have a significant impact on your bottom line. You’ll most likely be able to charge a greater price than other neighboring houses that don’t have a permit.
Conditional Use Permit FAQs
What is conditional use authorization?
A conditional use is how a parcel or structure is handled that is not generally authorized in a specific zoning district.
How do I get a conditional permit in California?
Conditional use permit applications can be received at the Planning Department counter or mailed upon request. The application form requires the property owner’s signature as well as a comprehensive legal description of the property. A scaled plot layout is also necessary to process the application.
What does variance requested mean?
A variance request is a request to deviate from current zoning regulations. If granted, it allows the owner to utilize the land in a way that the zoning ordinance does not allow. It is not a zoning law change. Instead, it is a special waiver of zoning ordinance restrictions.
What's the difference between a special use permit and a variance?
An application for a special use permit is not required to demonstrate hardship. Instead, the emphasis is on just demonstrating that the planned use fulfills the restrictions already outlined in the ordinance, whereas a variance is essentially permission to “break the law.”
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