By: Olivia K. Marr, Attorney

May 2015

Purchasing real estate is a big decision.  More often than not, buyers overlook the importance of reviewing the land use and building permit history before purchasing a home or investment property.  Such a review is important for home transactions as well as large scale real estate deals.

For example, as a homebuyer, a real estate agent may tell you that the house was properly permitted but how can you be sure that the addition over the garage is legal?  Will you be able to gain building and/or planning approvals to add on a bathroom or third bedroom you must have in order to make the house what you need?

For larger transactions, it can be damaging to a company to buy a property for a particular intended use and then later discover that it is planned for another use, that the building you purchased violates local codes or that the property you purchased zoned for residential is slotted for an open space designation in an upcoming General Plan revision.

As a buyer, you should know what you are “getting into” before you make your purchase.  While many people are comfortable working their way through a real estate transaction with the advice of a real estate agent, it is not an agent’s responsibility to advise you on building and land use related issues.   An attorney can help you understand the land use potential or limitations of a property, as well as make sure the forms you are signing are right for your unique transaction  and that you understand your legal rights with regards to zoning, easements, CC&Rs or other items that may impact the use of your property.

There is certain information that is key to understanding the legal status and development potential of property you or your company may be interested in purchasing.  An attorney will often create a due diligence checklist and can write a legal due diligence memorandum to advise you on the restrictions and possibilities of your proposed purchase by answering such questions as:

1. Which jurisdiction regulates the use of your property? Cities and counties are the “land use” jurisdictions in California.  In certain instances and depending on the type of development intended, certain Local Agency Formation Commission (LAFCO) or Coastal Commission issues may come into play.
2. What is the General Plan and Zoning designation regulating the property and will your development plans require amendments or changes to these regulatory tools? A General Plan is a city or county’s planning “constitution” and provides a roadmap and guidelines for all development within the community. The property zoning implements the General Plan and regulates the uses allowed on the property as well as the types of structures permitted.  Unless your intended use is consistent with the current General Plan and Zoning designations, a modification to these documents will be required through a discretionary approval process which in some instances may be difficult to achieve.
3. Is the land legally subdivided or will it require subdivision? Before any parcel of property may be sold, leased or financed, it must comply with the Subdivision Map Act.  Failure to have a “legal lot” may severely restrict development on your property in the future.  Purchasers of undeveloped land should know whether the property can or should be subdivided prior to development or whether the property has already been mapped (parcel or tentative) and what conditions to map approval apply (such as public infrastructure improvements and development fees).
4. Is the home or structure historically designated? If the property you are purchasing has historic significance, then you could be severely restricted in your ability to modify the structure in any way.
5. Is the lot “built-out” or would an addition or remodel increasing the square footage be permitted? Zoning not only regulates use but regulates the square footage, height and positioning of structures on your lot.

These are just a few of the question to be answered during a land use due diligence review and the answers you receive can be invaluable.  In every instance land use due diligence can be tailored to a person’s desires for the property.  I cannot stress the importance that land use diligence plays in helping my client’s understanding of whether a purchase represents a great buy, whether to walk away because the land use challenges are just too great to overcome or whether the initial offering price needs to be negotiated  because of underlying land use issues.

We look forward to being of service to you as we have with many owners of real property.

Olivia K. Marr, Attorney

OMarr@BFASLaw.com

(Direct) 805.966.7199

 © 2015 Buynak, Fauver, Archbald & Spray, LLP

DISCLAIMER:  This Advisor is one of a series of business, real estate, employment and tax advisories prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution of this legal Advisor.