Due Diligence - Rezoning Issues


#1

Through my due diligence I found the park was not properly zoned for MHP. The current owner is grandfathered in so it’s not a current issue, but could be a future issue if I bought the park. I engaged a lawyer to help me with the rezoning process. Based on feedback from the city planning and zoning contact, the process should move through smoothly, it would just take a few months to get through application, planning commission approval, then city council approval.

Once we gave notice to the current owner he backed out of the deal. I think he was worried if we went through the process, and didn’t get approved, he could be left holding a non-properly zoned MHP. He likely doesn’t know he’s currently grandfathered in. I think seller was also concerned any improvements the city required for re-zoning approval would get pushed back on him.

Is zoning common with long held MHP’s that transfer ownership? My attorney told me financing could be an issue if bank found out property is not properly zoned so I feel I had to push for re-zoning even though in this case it killed the deal.

Any tips for how to structure this deal with seller? It’s still a great buy and I’d like to find a way to comfort the seller.,


#2

Why would you re-zone it? If you did then you would have to start adhering to less ideal setbacks and requirements imposed by the City. Being non-conforming is ideal and simpler - the laws for grandfathering have been tested and hold up very well in court if it ever gets that far. The City should be letting you bring homes in and out using the existing setbacks without any issue - and if they’re not then the City is violating State laws. Hire a muni-lawyer with experience with grandfathering - they can speak with the City’s attorney to clear it up quickly. Grandfathering provisions are typically only removed from a property if the usage ceases for 12 or 18 months, which isn’t the case here, so it should not be a future issue for you or anyone in this scenario.

Read this: Putting the grandfathering concept to bed once and for all

If you want the deal to close simply keep it non-conforming, get a certificate of zoning, and follow all the other recommended steps in the MHU Due Diligence Manual.

Good luck.


#3

Go back to the seller, agree to purchase as is, and take advantage of the opportunity by making a lower offer. At this point he probably thinks he is backed into a corner and unable to sell. Use this to your advantage.


#4

Agree, why the hell would you rezone if it was grandfathered? You most likely need a new attorney. If the deal falls thru on financing, fine, that’s another issue. Do exactly as Greg said.