Let’s say you’re thinking about buying a South Florida property – but you want to adapt it for another use. Or you want to build something entirely different there. In either case, it’s a good idea to include a zoning contingency in the contract. Here’s why.
Why use zoning contingencies?
Contrary to popular belief, a landowner does not have the exclusive ability/right to seek rezoning and similar land use approvals. A would-be buyer can also seek such approvals, as long as he or she has the owner’s written permission.
If there is an obvious need for government approval of rezoning or other land use requests, your best bet is to include a zoning contingency in the real estate purchase contract. This will also give you an “easy out” if you don’t get the approvals you need and you are forced to find another site.
The ability to back out of a deal un-penalized when they can’t get necessary approvals makes this a popular strategy for real estate developers in Miami, Fort Lauderdale, and other high-growth areas in South Florida. For example, developers will often buy real estate subject to securing zoning approval to build a specified number of residential or commercial units on the property. Then, if they don’t get the necessary approvals, they can simply opt not to pursue the deal without significant ramifications.
There are several points to consider when preparing contract language pertaining to zoning contingencies and related matters.
The chief among these is that you as the buyer must do your due diligence. As part of this process, you must be sure to ask relevant questions about zoning and land use. In other words, you have to find out what can and can’t be done with the property before entering into any contract for the purchase of said property.
Depending on the circumstances, this can be an incredibly comprehensive and time-consuming process. Accordingly, you should not hesitate to contact an experienced South Florida real estate lawyer for help and legal advice.
A qualified attorney can also help you define the range of contemplated approvals and draft appropriate language. For example, the seller will benefit from language that limits the range of potential changes that a buyer can make to the property’s zoning because it effectively lessens certain risks.
Another important issue that must be taken into consideration is any language regarding the timing of the zoning approval period. The amount of time for public hearings and other such matters should be taken into account. The potential for appeals of an adverse decision should also be addressed. This is significant because an appeal will make the zoning/land use approval process even longer. Accordingly, the seller may want to include stipulations requiring additional fees or deposits.
Some other issues and concerns that should be addressed when drafting relevant contractual language include:
- Extra time and deposits
- Seller collaboration and prior consent
- Expiration of the contingency/continuation of the approval process
The bottom line
Although it is available to any prospective buyer who may need zoning/land use approval, the use of a zoning contingency in a real estate transaction is especially popular among Florida developers. This is because it allows them to change their minds about buying a property if they can’t get the necessary zoning/land use approvals.
However, poorly drafted language that fails to address key issues in any such contingencies may have serious and unintended consequences. Accordingly, it is critical to enlist the services of experienced real estate lawyers if you are thinking about pursuing this option. Contact the legal team at Eskander Loshak LLP to learn more about how we can help you craft an effective zoning contingency for use in your real estate transaction today. Call (954) 334-1122 today for a free consultation or email us at [email protected].