- QUESTION: I own a rental property located in a commercial area, but it is subject to a restriction in my deed that says it can only be used as a residence. May I still request the Township to change the zoning to commercial and may I simply ignore the deed restriction?
- QUESTION: My company is in the process of developing an office building that, once completed, will be leased to business professionals. We plan on pursuing a LEED certification for the project and would like to market the project as a "green building" to potential tenants. Is there anything we should be concerned about with respect to the project that we might not otherwise expect from a traditional building project?
- QUESTION: The use and dimensions of my commercial building pre-date the zoning code. I am told that no changes are permitted without zoning board approval. Is this true?
- QUESTION: After many months of discussions, the Township still refuses to accept dedication of the development improvements I constructed. Now I am stuck plowing the roads for another year. Do I have any remedies or is it "wait until next year"?
- QUESTION: Given the current softness in the market, more contract purchasers are trying to renegotiate or simply walk away from their contracts. How do I counter the various, and sometimes creative, arguments challenging the enforceability of my agreements?
- QUESTION: Can the zoning classification of land be challenged by opponents to development?
- QUESTION: I am considering purchasing a property, but the existing building and/or site amenities do not meet current municipal zoning ordinance requirements. I am told that the property is nonconforming, so there is nothing to worry about. True?
- QUESTION: Does the filing of a condominium declaration against a parcel of property subdivide the property?
- QUESTION: I've tried everything to convince the Township that rezoning my property for higher density is the right thing to do. Is there anything I may have overlooked?
- QUESTION: When conducting due diligence on the real estate development potential of an undeveloped parcel of ground, what information is the most important to know?
Back to Question and Answer Index
QUESTION: I own a rental property located in a commercial area, but it is subject to a restriction in my deed that says it can only be used as a residence. May I still request the Township to change the zoning to commercial and may I simply ignore the deed restriction?
ANSWER: As with most real estate questions, the answers to your questions can be complicated. However, we should first review some basic points. First, before requesting anything of the Township, you should deal with the deed restriction. A restrictive covenant is defined as a private agreement, usually in a deed or lease, that restricts the use or occupancy of real property, especially by specifying lot sizes, building lines, architectural styles, and the uses to which the property may be put. Restrictive covenants and deed restrictions are usually created by the initial developer of a group of properties, and may also apply to and be enforceable by other property owners within that group. Restrictions give a development a more standard appearance, and control some of the activities that take place within its boundaries. The theory is that when enforced, covenants protect property values. To determine whether other properties have enforcement rights, you may need to engage a title company to perform a detailed title search of nearby properties.
As a general matter, restrictive covenants on the use of land interfere with an owner's free use and enjoyment of real property and, therefore, are not favored by the law. Although the law may disfavor restrictions on an owner's free use and enjoyment of real property, restrictive covenants are legally enforceable. It may be necessary for you to file a "quiet title" action requesting that a court remove the deed restriction based upon changed circumstances, such as a change in the character and zoning of the surrounding community. However, others with enforcement rights could oppose your request. Following the procedural requirements associated with quiet title actions is essential. For example, the failure to sue just one individual beneficiary of a deed restriction could defeat the entire action. A court will be very diligent in making sure that all possible beneficiaries of the deed restriction have their day in court.
The good news is that legally speaking, restrictive covenants and deed restrictions have nothing to do with zoning or governmental regulations. Those are separate issues that could affect the way you use the property. Nonetheless, the time and cost for seeking a change in zoning regulations may not be justified if there is substantial risk that someone may contest your rights based upon a deed restriction. In any event, it is useful to make sure that a careful evaluation has been made as to the likelihood of success for both the quiet title action and the municipal zoning process, since one will necessarily be useless without the other.
QUESTION: My company is in the process of developing an office building that, once completed, will be leased to business professionals. We plan on pursuing a LEED certification for the project and would like to market the project as a "green building" to potential tenants. Is there anything we should be concerned about with respect to the project that we might not otherwise expect from a traditional building project?
ANSWER: The good news is that, in many instances, while the type of construction may be new (green roof, grey-water recycling, etc.) there is nothing especially new about many of the claims that may arise as a result of green construction. A defect in the design, fabrication, installation or operation of a building component - green or not - is the likely source of a traditional breach of contract claim against the responsible party; which claim will presumably be covered via traditional insurance and/or bond products. Similarly, an overzealous marketing campaign that promises more than it ultimately delivers may lead to claims of fraud, misrepresentation, or breach of warranty.
However, there is a uniqueness to green construction that may raise potential legal concerns beyond those of traditional building projects. Two key areas unique to green construction that do represent relatively uncharted territory, or at least, change the dynamics at play in risk allocation among the parties are (i) achieving the desired level of LEED certification, and (ii) marketing/leasing green buildings to end users.
Procuring LEED certification is a highly specialized process and requires careful coordination among all aspects of the design, construction, and operation of the building. A misstep at any point along the way can mean the difference between, for example, gold and silver certification or (gasp!) a failure to achieve any level of certification. As the developer, your contracts with both your design professionals and contractors should contain a clear allocation of risk and responsibility among the parties relative to the certification process. In addition to the contracts themselves, you need to take a careful look at the corresponding insurance and bond instruments that you may well have to rely upon should something go wrong, as additional language or expanded coverage may be necessary.
With respect to marketing, the key is understanding tenant goals and managing tenant expectations. You want to be especially careful of overly broad language (e.g. "green," "high performance," "energy efficient") that may mean many different things to many different people. Additionally, you need to educate the end user on any responsibilities they may have with respect to achieving the efficiency and cost-savings goals they may have.
Be it a contract, marketing materials, or a lease, careful drafting and open communication will be key to a successful green project.
QUESTION: The use and dimensions of my commercial building pre-date the zoning code. I am told that no changes are permitted without zoning board approval. Is this true?
ANSWER: Unfortunately, the answer may be "yes" and "no." First, however, you need to determine if your building is really nonconforming, i.e., pre-dates the current zoning code, or was simply built and/or used in violation of zoning restrictions that existed previously. The term "non-conforming use" is often used indiscriminately to refer to a zoning violation. This is a misuse of the word. In zoning law, a "non-conforming use" is a term of art with a very specific meaning.
A non-conforming use must be legal when established but later fails to conform because of a change in the law. This occurs when (a) new zoning is imposed on property which is previously unzoned; (b) the property was rezoned from an old zoning category to a new zoning category; or (c) the zoning category is not changed but the uses allowed in that category are changed. The term is normally not used to describe a run-of-the-mill zoning violation.
A non-conforming use can be legal or illegal, depending upon the local zoning code. As a general rule, a use which was legal when commenced remains legal after a change in the law. For example, suppose a gasoline service station was legally established under zoning. If the land is later rezoned for residential use, the gasoline station is normally permitted to continue to operate as a legal non-conforming use, even though it is located on land zoned for residential use, because the use was legal when commenced.
Accordingly, a property owner has a constitutional right to continue a legitimate non-conforming use or structure. The presence of a non-conforming use that may not be a good fit with the neighborhood, offers both a challenge and an opportunity arising from the uniqueness of its circumstances. For example, what can be done about the non-conforming use which must expand to suit a growing demand for its products or services? The right to continue nonconforming uses or structures includes the right to make such necessary additions as are needed to provide for "natural expansion" that is not detrimental to public welfare, safety and health.
A non-conforming use is not necessarily exempt from the zoning laws, though. There are certain limitations, many of which will be unique to the local zoning code governing your property. In fact, in a recent Pennsylvania case, the right to argue a nonconforming use was lost simply by the failure to properly register the use. Therefore, prior to any change in use or expansion project, you should consult counsel to determine the best course of action.
QUESTION: After many months of discussions, the Township still refuses to accept dedication of the development improvements I constructed. Now I am stuck plowing the roads for another year. Do I have any remedies or is it "wait until next year"?
ANSWER: Of course. Often times a municipality will refuse to accept dedication without any legitimate justification, in an effort to defer public maintenance costs for improvements. When this occurs, the developer has the right to seek a writ of "mandamus" wherein a court will order the municipality to accept public dedication of the improvements. Mandamus is the power of the court to compel the performance of a ministerial act or mandatory duty by a public official or body, when a clear legal right exists in the plaintiff, a corresponding duty exists in the defendant, and no other appropriate and adequate remedy is available. Keep in mind, however, that mandamus is not an appropriate remedy if the action of the municipality or public official involves the exercise of some discretion. Therefore, it is critical to make sure that you have followed all appropriate procedural requirements prior to requesting mandamus. For, example, the dedication process has its own set of requirements enumerated in the Pennsylvania Municipalities Planning Code. While there is sometimes an inclination to "shortcut" the process and not follow each and every requirement to the letter, the failure to do so may be fatal to your mandamus request. Some developers are reluctant to seek the assistance of an attorney during the dedication process, as a means of "low keying" the process. Very often this strategy will backfire when it becomes clear that a legal remedy is necessary.
Litigation does not always equate to unreasonable delay in the world of mandamus. Courts are permitted to hear a motion for "peremptory" judgment in mandamus, which means that under certain circumstances, a mandamus complaint may be heard by the court on an emergency basis. It gets even better. While not necessarily a sure thing, the court is empowered to award damages and attorneys fees for egregious conduct by a municipality or public official. However, one should never seek mandamus merely as a vehicle to obtain damages. The primary focus should always be compelling the public body or official to perform an act that they have so far refused to perform. Mandamus is also appropriate to compel the issuance of a permit, challenge the denial of a land development or subdivision application and enforce a deemed approval.
QUESTION: Given the current softness in the market, more contract purchasers are trying to renegotiate or simply walk away from their contracts. How do I counter the various, and sometimes creative, arguments challenging the enforceability of my agreements?
ANSWER: There is no such thing as a "one-size-fits-all" real estate agreement. A comprehensive and reliable form should be tailored to reflect the unique issues in a given transaction. I am intrigued by the number of agreements I see that are simply "form" agreements, often obsolete, that have been handed down through the years. No one should rely on a form agreement that has not been carefully reviewed and if necessary, tailored to a particular transaction. While it is advisable to use checklists and forms as basic guidelines, even the simplest and shortest agreements must satisfy the basic tests for a contract. Of particular note are recent cases that permit a purchaser to cancel a contract because the contract lacked "mutuality of obligation" - a legal term of art signifying that the developer retained all remedies while the buyer could only request a refund. Due to this limitation of remedies clause, the Court found that the seller had no obligation to perform under the contract because the seller could default without recourse and only the buyer was bound to actually perform. Thus, the court found this form of contract to be unenforceable. While circumstances may differ depending on the transaction and jurisdiction, a developer should nevertheless be aware of these rulings in analyzing their sales contracts. Also, a developer must always be cautious that while an agreement may appear to be complete on its face, any ambiguity or vagueness may open the door for a buyer to allege issues such as duress, misrepresentation fraud or mistake in an attempt to void the contract. While the list of potential pitfalls would far exceed the scope of this article, some key points are worth noting. Consider the use of recitals or "whereas" clauses that precede the body of a contract. They provide a simple way to bring the contract's reader (party, judge or jury) up to speed on what the contract is about, who the parties are, why they are signing a contract, and most importantly, the parties' intent. Also, make sure the property description is accurate and the time periods and dates are clear - use specific dates rather than ambiguous calculations, if possible. Lastly, avoid the hucksters who sell "iron clad" agreements on the internet or otherwise attempt to promote the "cut and paste" method. Believe me, the pennies you save today will be far exceeded by the litigation costs tomorrow.
QUESTION: Can the zoning classification of land be challenged by opponents to development?
ANSWER: Zoning classifications can be attacked by a validity challenge. Ordinarily, the time to challenge on substantive grounds starts when a challenger learns (or should have learned) that a building permit was issued. Procedural validity challenges have been allowed by the Pennsylvania courts despite being filed after the expiration of the 30-day appeal period. Procedural challenges have been successful even where there have been relatively minor flaws in the enactment process. Prior to embarking on a development project, due diligence should include an analysis of the substance of and procedures related to the zoning classification. If concerns are raised there are actions that should be considered to help manage these risks.
By: George W. Broseman, Esquire
QUESTION: I am considering purchasing a property, but the existing building and/or site amenities do not meet current municipal zoning ordinance requirements. I am told that the property is nonconforming, so there is nothing to worry about. True?
ANSWER: Maybe, maybe not. Just because something is nonconforming (does not meet current zoning requirements) it is not necessarily legally nonconforming. In order to be legally nonconforming, the condition on the property - use, amount of impervious coverage, encroachment into required front yard, etc. - must have legally existed prior to the ordinance change that has now made it noncompliant. If the condition(s) did not, it will not be considered a legal nonconformity, which can lead to problems down the road should you wish to alter the existing improvements.
QUESTION: Does the filing of a condominium declaration against a parcel of property subdivide the property?
ANSWER: No. While the owner of a parcel of property may divide a property into units for individual sale absent a subdivision approval by following the procedures set forth under the Pennsylvania Uniform Condominium Act, the creation of a condominium out of an entire parcel of real estate will not, in and of itself, constitute a subdivision or land development. "Condominium" is a form of ownership, not a form of land development. However, a municipality's zoning, subdivision and building codes may not prohibit the condominium form of ownership or impose any requirement upon a condominium which it would not impose upon a physically identical development under a different form of ownership.
QUESTION: I've tried everything to convince the Township that rezoning my property for higher density is the right thing to do. Is there anything I may have overlooked?
ANSWER: Each and every one of the developers I represent are appropriately focused on the finish line, i.e., when will my project be rezoned or approved? However, the municipality is often more focused on the process, i.e., how do we get to the desired result by allowing the proper mix of public participation (often opposition) with good planning techniques? The "inconvenient truth" is that both the process and the result need to make sense for all parties concerned. The rezoning that offers greater economic such as increased tax revenue, may be sufficient to win the day in big cities and economically distressed small towns where the tax base is dwindling and economic development is encouraged. However, suburban communities may not have the same priorities.
Many local land use codes were written in the 1950s and 1960s and have not been updated to reflect new planning techniques. These codes, while presenting challenges, also present opportunities for modernization and positive change. Instead of seeing the proverbial "dark cloud," look for the silver lining. Whether the term is "smart growth," "sustainable development," or "green building," these terms speak to new planning techniques and trends in which developers and government have found better ways to present plans, streamline the permits process and create an end-product far more attractive and respectful of the environment than ever before. The use of best management practices for stormwater management, traffic calming measures, alternative utility sources, village and other sustainable designs are all methods of presenting and implementing development in a less threatening and more adaptive approach.
Many elected officials are finally coming to the sober realization that real estate development is a critical component of sustained economic growth. Brownfields need to be redeveloped, adaptive re-uses must be found for closed military facilities and our inner cities and small towns must be revitalized. Small business cannot develop, thrive and survive without new customers and those customers must come from new office buildings, industrial complexes and residential communities. Creating communities which have educational, recreational and commercial facilities within walking distance reduces traffic and the need for additional roads and infrastructure.
Developers and communities must find new ways to co-exist and to cooperate to solve problems, whether real or perceived. Cooperation begins with novel ideas, good communication (often listening more than speaking) and a professional presentation. As noted author Lilly Waters has commented, "... the success of your presentation will be judged not by the knowledge you send but by what the listener receives." Remember these words and the process will be less painful.
QUESTION: When conducting due diligence on the real estate development potential of an undeveloped parcel of ground, what information is the most important to know?
ANSWER: Obviously, the most important information to know with respect to the development potential of an undeveloped parcel of ground is how that property is zoned. However, in an ever increasing world of government and environmental regulation, knowing the soils types on the property and whether there is adequate infiltration or absorption on the property has quickly become almost as important a piece of information as knowing how the property is zoned. In fact, with the Pennsylvania Department of Environmental Protection's increased requirements for infiltration of stormwater and the Department's "encouragement" that infiltration be spread out throughout the property as much as possible, many times it is unwise to simply rely upon zoning information alone to determine the real estate development potential of an undeveloped parcel of ground. In addition, if a public wastewater system is not available, the soils on the undeveloped parcel of ground will also determine the real estate development potential of an undeveloped parcel of ground. Therefore, before engaging a land planner or engineer to sketch out a possible development, you should engage a soils scientist to conduct some preliminary soils testing on the property to determine the areas most suitable for infiltration purposes and then develop around those areas if possible.
