Zoning reports are crucial for the due diligence process in commercial real estate transactions. Understanding and complying with municipal zoning codes and regulations is necessary to ensure a project can proceed as planned. Because zoning ordinances frequently change, it’s essential for all parties involved to have accurate, timely zoning reports that present a clear overview of a property and highlight potential complications.
- Zoning reports come in many forms—they are not a “one size fits all” document
- Accurate zoning reports can help keep a project on track by alerting stakeholders about potential problems
- LightBox PZR™ provides a range of reports, from basic to comprehensive, allowing clients to customize an order for what they need for any project
Customers seeking zoning reports often come to LightBox with questions: What is the difference between our zoning reports? Why are there several kinds? The answer partly depends on what is needed for a title endorsement or for the lender to provide additional casualty insurance in the event of a legally nonconforming property.
American Land Title Association (ALTA) requirements govern title surveys and require certain zoning information if requested on Table A of Optional Items. Our clients will often ask us to prepare a Title Insurer Packet, our most basic report, which provides zoning requirements such as permitted uses and current building setback requirements, including specific setback lines to assist the surveyor in plotting; height, density, and area restrictions; parking formula requirements; and applicable zoning code sections, though no municipal documents are ordered.
When a zoning report request comes to us, we ask the client for site data to ensure we identify the correct property—addresses are among the least accurate pieces of data in the real estate industry. For example, 100 Main Street might target a store, but the client wants us to look at all of the outbuildings on the property, which might include other addresses.
Parcel numbers are a better indicator than addresses of what a property is, and we’ll always ask for lot and block information. Prior surveys are helpful if they’ve been updated. We need information about proposed uses and tenants’ square footage for some transactions. In many cases, parking can pose challenges. For a business, we might have to know the maximum number of employees on a given shift or how much warehouse space is used for office needs.
LightBox PZR Reports are the gold standard of zoning due diligence. Which should you order?
The PZR Report, our most comprehensive report, shows all conformance issues and indicates any potential violations. About 90 percent of our clients order these. These reports are supported by municipal documentation, and every major lender and title company in the U.S., including Fannie Mae and Freddie Mac, accept them. They provide the due diligence necessary for issuing zoning endorsements, ordinances, or law policies. The PZR Report includes a review of the current municipal zoning requirements with the existing survey in conjunction with municipal approvals and historical documents and conformance status to zoning as to permitted uses, building setbacks, building height, density/FAR, and parking, as well as a right to re-build statement for legally nonconforming issues.
These reports contain the following documents obtained from municipalities:
- Zoning verification letter, including a copy of the municipal zone map
- Copies of applicable variances, special permits, conditions, ordinances, and rezoning approvals
- Copies of outstanding zoning and building code and fire code violations
- Copies of existing certificates of occupancy
- Copies of approved site plans and approvals as available
For customers who don’t need a comprehensive report, LightBox offers other options. When a survey is unavailable, or you are simply trying to determine if a particular use is permitted on your land, we provide a UseAnalysis Report that offers a conformance determination for the existing or proposed use.
Our Executive Summary Report (ESR) speaks only to the conformance status of the site itself and can be helpful when a jurisdiction might take months to provide documentation. Based on a review of the municipal website, these reports quickly review how the site can be used and information such as building setbacks, building height, density, and parking. The ESR provides the data to issue the 3.1-06 zoning endorsement.
Sometimes it’s just a matter of municipal document acquisition. Our information specialists have a time-tested system for finding any document our clients need, which is part of what makes our service so valuable. With access to a database of more than 20,000 municipal contacts and a zoning library containing more than 6,000 zoning ordinances, they can coordinate and collect information—including zoning verification letters, including municipal zone maps when available; copies of outstanding zoning, building, and fire code violations; variances, special use permits, and conditional use permits; site plans, and copies of existing certificates of occupancy—with great speed and efficiency. To learn more about LightBox PZR zoning reports, visit https://www.lightboxre.com/product/pzr/ or contact your sales representative.