Purchasing & Developing Land - Part 4 - Zoning & Permitting for Development

Having bought and assumed ownership of a raw land lot (or lots), the new owner faces the challenge posed by local rules and regulations. Ideally, this comes as no surprise and the owner is prepared to do what is necessary to bring the property into legal compliance. Sometimes, however, an attractive lot for home building might actually sit in a commercial, agricultural, specialized or industrial zone. Whatever the likely prospects for re-sale, this matter should be addressed before the land is prepared for construction. The last thing anyone needs is trouble with the town or county authorities.

Types of Zones

While there is variation among jurisdictions, the kinds of property zones usually fall into the following main categories:

Residential -- where houses are allowed -- single-family and multi-family -- and are arranged in development tracts.
Commercial -- these zones are occupied by business offices, retail stores and other establishments where trade takes place. Apartment buildings of over four units can be considered commercial, but not always.
Industrial -- this is where manufacturing and related research buildings are found.
Agricultural -- where farm operations occur, i.e., the growing of crops and raising of livestock.
Historical -- where buildings and lands are preserved for educational and legacy purposes.
Recreational -- sports fields, tennis courts, pools and playgrounds populate this zone.

Changing the Zone of Your New Lot

To re-zone new property, an owner must research the laws and ordinances of both state and city. In New Jersey, for example, each city or township has the authority to govern zoning within its boundaries. To use your raw land for a new home, unless the lot is zoned residential, you must obtain a variance from the local zoning board of adjustment. A use variance serves as permission to use the land in a manner otherwise forbidden by local zoning laws. In this case, the burden is on the owner to demonstrate why placing a house in a commercial zone is a positive for the community. Because the board will look for legal justification for the variance, a land use attorney can be very helpful in the quest for a zoning exception.

There are some areas that are protected by state authority and will, thus, be ineligible for a variance of any kind. Many states take particular interest in riparian zones, freshwater wetlands and environmentally sensitive coastal areas. Of course, this knowledge should be gained before the purchase.

Construction Permits, etc.

When all the zoning issues are settled, the municipality still has an interest in the way the land will be developed. In order to obtain a construction permit in most places, an applicant must submit building plans to the local construction code office. If using a contractor, that person will make the application and submit the relevant data. Beyond the construction permit, you may also need permits for sprinkler systems, plumbing work, electrical installations and mechanical systems. Again, these requirements differ by jurisdiction and the timeframe for getting them also varies.

Another factor is the cost: these permits are more or less expensive contingent upon where you are building. It is imperative to budget for every aspect of home construction -- permits included -- because home value will be the return on investment. Accordingly, either you or your general contractor should assemble all the forms and documentation well in advance of making an application to build on your vacant land.

The last post in this series will focus on how to market and sell your house and determine home value.