What is Zoning in Real Estate? What You Need to Know Before Buying Land

September 3, 2024

Imagine this – you drop $500,000 on your dream property only to find out you can’t use it the way you wanted.

That’s the harsh reality for many investors who didn’t factor in one key element: zoning. You’re here because you know zoning matters but like many you might be wondering: “How deep does this rabbit hole go?”

Whether you’re looking at that downtown lot for a trendy bistro or planning to turn a suburban home into an Airbnb, zoning laws can make or break your real estate goals. But here’s the thing – understanding zoning isn’t just about knowing what’s allowed today. It’s about knowing what will be allowed tomorrow and how those changes will make (or break) your property’s value.

It’s a set of rules that governs property use in a particular area. These rules determine what you can build on a piece of land. They also determine how you can use that land. Understanding zoning is key when buying land. It can make or break your real estate goals.

What Are Zoning Laws?

Zoning laws are how we use land in real estate. They’re a set of rules for property use in a particular area. These rules determine what you can build on a piece of land and how you can use that property. Zoning ordinances are created to help structure these uses. Local zoning laws are essential when buying land or real property as they can kill your real estate plans.

Local zoning ordinances are created and enforced by local governments or municipalities. They divide land into use categories: residential, commercial, industrial, and agricultural. Each of these zoning districts has its own rules for what can be built, how tall it can be, and what can be done.

Zoning refers to how local governments control the use of real property. Zoning laws determine how real estate can be used and recognize that zoning laws will affect businesses and residential properties differently. So you need to understand the law's definition and zoning types before making any real estate investment.

The Purpose of Zoning

Zoning laws are designed to manage land use and protect property values. Here's a concise overview of their purposes:

General Purposes

Separate Incompatible Uses: Keep industrial areas away from residential areas to avoid conflicts and protect quality of life. For example, cities may use zoning to restrict the development of large warehouses, loud manufacturing facilities, or airports near residential zones.
Promote Public Health and Safety: Limit pollution and overcrowding, set building height and density standards, and keep hazardous facilities like warehouses and loud manufacturing facilities away from homes and schools.
Manage Traffic and Parking: Reduce congestion by providing adequate parking and planning for road capacity for new developments, especially in commercial zones.
Preserve Community Character: Maintain neighborhood aesthetics and balance development with environmental conservation. Zoning laws affect how residential neighborhoods and commercial and residential areas coexist.
Guide Future Development: Direct growth to areas that can support it and allow cities to plan infrastructure, including the protection of natural lighting and air quality.

Commercial Zoning Purpose

Create Economic Activity: Designates areas for businesses, creates jobs and economic growth, and attracts industries through incentives.
Manage Business Impacts: Controls noise, traffic, and light pollution to residential areas.
Ensure Infrastructure: Ensures businesses have utilities, roads and parking to avoid overloading local services.
Mixed Use: Allows residential above businesses to create walkable neighborhoods.
Attract Specific Businesses: Uses zoning to attract desired industries and create business clusters to enhance economic synergies.

Know your general and commercial zoning, so you can plan and protect your land use. Check zoning maps and local council.

How Zoning Law Work

Zoning laws shape our neighborhoods and cities, where we live, work, and play. Let’s look into how these regulations work and change over time.

Basic Principles of Zoning Regulations and Laws

Zoning laws divide land into use categories. These categories are residential, commercial, industrial and agricultural. Each zone has its own rules for what can be built, how tall it can be, and what can be done.

Local government creates and enforces zoning laws through zoning ordinances. They want to promote orderly development and protect property values. These ordinances dictate what can be done on each zone, taking into account natural light, air quality, and environmental factors.

Changes and Amendments to Zoning Laws

Zoning laws aren’t set in stone. They can change to meet changing community needs. Property owners can request rezoning, which involves applying to the local zoning board for a change in land use designation. Cities can also initiate zoning changes, often during comprehensive plan updates or to encourage certain types of development in a residential zone.

Public hearings are usually required for zoning changes. This allows community members to speak up on proposed changes. Zoning variances are another way to modify land use. These are exceptions granted for specific properties when strict application of zoning laws would cause undue hardship. Conditional use permits allow certain activities in a zone where they’re not allowed. These require special approval and may have conditions.

Knowing zoning laws is key when buying land. It will help you know what you can and can’t do with the property. Zoning regulations can affect property values. They can change the character of the neighborhood and the types of development around you.

Before buying land, research its zoning designation. This info is usually available from your local planning or zoning department. Also research future zoning changes. Look at the city’s comprehensive plan to see if there are any changes proposed for the area you’re interested in.

Types of Zoning Restrictions

When buying land or real estate, understanding zoning types is key. Here are the main types of zoning:

Residential: Homes and living spaces, single-family houses, apartments, condos. Residential zones often have restrictions on home-based businesses.
Commercial: Businesses and offices, retail stores, restaurants, service-oriented companies. Commercial zoning has rules on parking, signage and hours of operation.
Industrial: Manufacturing, warehouses, factories. Industrial zones are businesses that can be noisy or pollute the air. These are usually separate from residential areas due to noise, traffic and pollution.
Historic: Preserves historic buildings and neighborhoods.
Agricultural: Farmland and limits non-farm development. These zoning laws protect farming communities and may limit the number of animals on a property.
Institutional: Public and community facilities like schools, hospitals and government buildings.
Open Space: Natural areas and parks.
Mixed-Use: Combines different types of land use, residential, commercial and office spaces in one area.
Planned Unit Development (PUD): Flexibility in land use, allows developers to propose unique projects that don’t fit into traditional zoning categories.

Understanding Zoning Codes

Zoning codes are the rulebook for land use in real estate. They dictate what can be built where and how properties can be used. Let's break down these codes and their impact on property ownership.

Subcategories

Zoning laws often have sub-zones within main zones. These are more specific guidelines for land use. For example, residential sub-zones might be R-1 for single-family homes, R-2 for two-family homes and R-3 for multi-family homes. Commercial sub-zones could be C-1 for neighborhood retail, C-2 for general commercial and C-3 for central business districts.

Exemptions

Zoning laws have exceptions. These are special cases where the rules don’t apply. Here are some common exceptions:

Grandfathering: Existing structures that don’t meet current zoning standards can stay.
Variances: Property owners can request an exception to the zoning rules if strict adherence would cause undue hardship.
Conditional use permits: Allows specific uses not typically allowed in a zone, subject to conditions.
Non-conforming use: A property use that was legal before a zoning change can continue.
Home occupations: Some residential zones allow small, low-impact businesses in homes.

Zoning Laws vs. HOA Rules

While both zoning laws and HOA rules govern property use, they’re different. Zoning laws are government regulations that apply to all properties in a specific area, regardless of ownership. HOA rules are private agreements that only apply to properties within a specific homeowners association.

Zoning deals with broad land use categories. HOA rules often deal with specific issues like exterior paint colors or lawn maintenance. Both zoning laws and HOA rules can restrict property use. But HOA rules can be more specific and stricter than zoning laws. HOAs can’t override zoning laws. If there’s a conflict, zoning laws win.

When you buy property, check both zoning laws and HOA rules. They both impact what you can do with your property. Knowing the difference helps you make smart real estate decisions. So you know what you’re getting into when you buy land or property.

Regulation of Development

Zoning laws can determine land use, but they have limits. Let's explore these boundaries and the challenges they face.

Limits on Zoning Regulation

Zoning powers aren’t absolute. They must balance public good with private rights. Here are the limits:

Constitutional protections limit zoning reach. The 5th Amendment prevents taking of property.
Courts review zoning laws for fairness. They won’t let regulations go too far on property use.
Zoning can’t discriminate. It must treat similar properties the same.
Some states limit local zoning authority. They can override local rules for certain developments.
Federal laws trump local zoning. The Fair Housing Act, for example, prevents discriminatory zoning.
Some states have “takings” laws. You have to pay if zoning severely limits land use.

Challenges to zoning regulations

Land owners can fight zoning. They have several ways to challenge regulations.

Variances get you out of strict zoning rules. You can ask for exceptions for unique hardships.
Conditional use permits allow non-conforming uses. They give you flexibility within existing zoning.
Legal challenges can overturn zoning decisions. Courts will rule against zoning that’s arbitrary or unreasonable.
Political action can change zoning laws. Community groups often lobby for zoning changes.
Economic pressure can force zoning updates. Cities will revise old rules to attract development.
Legislative action can change zoning laws. Citizens can lobby local officials and get new zoning ordinances.

Non-government Restrictions

Zoning isn’t the only limit on land use. Private agreements can limit property rights as well.

Restrictive covenants

Covenants are private land use agreements. They bind future owners to certain rules. These covenants can be more specific than zoning. They might dictate house color or lawn maintenance.

Homeowners’ associations enforce these rules. They can fine you if you violate the covenants. Courts generally uphold valid covenants. But they won’t enforce those that are discriminatory or against public policy.

Covenants can increase property values. They maintain neighborhood standards and appearance. But they can also limit owner freedom. Always read covenants before you buy.

Easements

Easements give others the right to use your land. They can affect property use and value big time.

Utility easements are common. They allow companies to access your land for power lines or pipes.
Access easements let others cross your property. They might be the only way to a public road for a neighbor.
Conservation easements protect natural features. They limit development to preserve wildlife or scenery.

Easements can be by agreement or necessity. Some are short term, others permanent. They “run with the land,” meaning they usually pass to new owners. Always check for easements before you buy.

Rezoning a Parcel

Rezoning can change the uses of a property. It’s a powerful tool but not always easy. Sometimes the existing zoning doesn’t fit. Rezoning can change how land is used.

The rezoning process:

Application: The owner or developer submits a request. They explain what they want to change and why.
Review: Staff reviews the proposal. They check if it meets local plans and laws.
Public notice: Neighbors are notified. Signs go up and notices are mailed.
Hearings: The public can speak. Planning boards listen and make recommendations.
Decision: City council or county commission votes. They can approve, deny or modify the request.

Property owners or developers initiate most rezoning requests. Sometimes cities rezone areas as part of a larger planning effort. Rezoning must fit the area’s master plan. It should benefit the community not just the property owner.

Neighbors often resist rezoning. They may fear more traffic, noise or changes to the neighborhood character. The local planning commission reviews the rezoning request. They make recommendations to the city council or county board.

Elected officials make the final rezoning decision. They weigh the needs of the property owner, neighbors and the broader community. If rezoning is denied, the owner can appeal. They can also wait and reapply when conditions change.

Rezoning can greatly increase property value. It can allow more uses of the land. But rezoning is not guaranteed. Always consider current zoning when buying land not potential future changes.

Factors in rezoning decisions:

Compatibility with surrounding properties is key. Will the new use fit in with the nearby properties?
Infrastructure capacity matters. Can roads and utilities handle the change?
Economic impact is considered. Will rezoning bring jobs or tax revenue?
Environmental impact is important. Rezoning shouldn’t harm natural resources.
Community input counts. Strong opposition can sway the decision makers.

Rezoning can increase property values. It might allow more uses. But it’s not guaranteed. The process takes time, effort and often money.

How Zoning Affects Property Rights

Zoning laws dictate how you can use your land. They balance individual rights with community needs. These zoning regulations can limit what you build, how you use your property, and even its value.

Zoning ordinances set rules for land use in specific areas. They may restrict building height, lot coverage, or permitted uses. For homeowners, this could mean limits on home-based businesses or additions to your house. For developers, zoning determines what kind of projects can be built on a piece of land.

Zoning laws allow local governments to limit certain activities in specific areas. For example, they may prohibit large warehouses or loud manufacturing facilities in residential areas. Commercial zoning laws may prohibit activities that could disturb nearby residents such as those that produce loud noises or air pollution.

But zoning isn’t absolute. Property owners have rights, too. The Fifth Amendment protects against “takings” – when government regulations go too far in limiting property use. Courts use several tests to determine if a zoning law crosses this line, including physical invasion, economic impact, and interference with investment-backed expectations.

Conclusion

As we’ve seen, zoning is so much more than a set of rules – it’s a living, breathing entity that shapes our communities and investment landscapes. But knowing the rules is just the beginning. The real power lies in understanding how to navigate and even influence these zoning regulations to your advantage.

So what’s your next move? Here are some action steps to consider:

Dig deeper into your local zoning codes. Each municipality has its own quirks, and understanding these nuances could uncover hidden opportunities.
Get to know your local planning department. Building relationships now could pay off when you need guidance or support for future projects.
Stay informed about proposed zoning changes in areas you’re interested in. These changes can create opportunities for those who are paying attention.
Join local real estate or development associations. These networks often have inside information on upcoming zoning changes and development trends.
If you’re serious about development, start thinking about how you can influence zoning in your area. Remember these laws aren’t set in stone – they evolve with community needs and visionary input.

In the world of real estate, knowledge isn’t just power – it’s profit. By understanding zoning, you’re not just playing the game – you’re changing the board. So go ahead, take that property listing you’ve been looking at and look at it through the lens of your new found knowledge. You might just see what others don’t.

Back to blog