Investing in a multi-family property can be a lucrative way to ensure a second income, but it's crucial to approach the process wisely and thoroughly. Ensuring that all proper due diligence is completed can prevent future complications and safeguard your investment. Here are the must-dos when buying a multi-family property, with a special focus on properties with pre-existing nonconforming uses that if not done can and will likely cause issues for you in the future.
Confirm that Current Zoning Permits the Use
If it does not them you must determine if it is a Pre-Existing Non-Conforming Use.
Understanding Pre-Existing Nonconforming Use
A pre-existing nonconforming use refers to a situation where a property's use was initially permitted by the zoning code, but has since been prohibited due to a change in zoning laws. It is essential to verify that the property maintains its "grandfathered" rights to continue its nonconforming use and that it is documented by a “timely issued zoning permit” of a conforming or non-conforming use. This is not as straightforward as obtaining a simple zoning permit or acknowledgment from the town.
Key Legal Documents
To ensure that the property has legitimate grandfathered rights, you need one of the following:
- Zoning Permit Issued Within One Year of the Zone Change: This document must be from the period immediately after the zoning laws changed, prohibiting the use it is of no use.
- Certificate of Nonconforming Use: Obtained from the municipality's zoning board of adjustment, this certificate confirms the property's right to continue is recognized and found to be a previously nonconforming use.
The Importance of Documentation
If the seller cannot produce these documents, do not proceed with the purchase until you secure them. This often requires:
- Factual Research: Proving the pre-existing nonconforming existed back before the time it became illegal, likely will involve extensive research, sometimes going back decades or even a century.
- Continuous Use Evidence: You must demonstrate that the prohibited use continued uninterrupted from the time when it was permitted or provide evidence that the owner did not intend to abandon the use.
- An approval from the Municipal Zoning Board of Adjustment.
Risks of Insufficient Documentation
Without the necessary proof and certification:
- Legal Challenges: Your right to continue using the property as a multi-family dwelling can be challenged by the municipality or third parties at any point in time in the future.
- Financial Consequences: Legal disputes and the potential loss of the property's nonconforming status can result in significant expenses and loss of revenue.
Engaging a Knowledgeable Attorney
Given the complexities involved in confirming a property's pre-existing nonconforming use, it's essential to have a knowledgeable attorney represent you through the process. An experienced attorney will:
- Guide you through the due diligence process.
- Help you secure the necessary documentation.
- Advise you on whether to proceed with the purchase based on the legal standing of the property's use.
Conclusion
Purchasing a multi-family property can be a sound investment, but it's crucial to perform comprehensive due diligence to protect your interests. It is not enough to give a current zoning permit if the use is not currently permitted in the zone. Ensuring that the property has valid grandfathered rights for any pre-existing nonconforming use is vital. Engage a knowledgeable attorney to navigate the complexities of the process and secure the necessary documentation. By doing so, you can avoid future legal challenges and financial losses, ensuring your investment remains a profitable one.
To speak with a professional regarding your multi-family property purchase, contact Semeraro & Fahrney, LLC, today!
