LEARNING OBJECTIVES
When you've finished reading this Chapter, you should be able to:
     ► identify the various types of public and private land-use controls.
     ► describe how a comprehensive plan influences local real estate development.
     ► explain the various issues involved in subdivision.
     ► distinguish the function and characteristics of building codes and zoning ordinances.
     ►define the following terms: buffer zone; building code certificate of occupancy; comprehensive plan; conditional-use permit; covenants, conditions, and restrictions (CC&Rs); density zoning; developer; enabling acts; Interstate Land Sales Full Disclosure Act; inverse condemnation; nonconforming use; planned unit development (PUD); plat; restrictive covenants; subdivider; subdivision; variance; zoning; and zoning ordinance.

REAL ESTATE PRACTICE & PRINCIPLES KEY WORD MATCH QUIZ --- CLICK HERE ---
I would encourage you to take this “Match quiz” now as a pre-chapter challenge to see how many of these key words or phrases you are familiar with. At the end of each chapter I recommend that you take the quiz again to reinforce these important keywords. Each page contains four words or phrases and you need to drag and drop the correct definition into the puzzle key. Each page is considered as a question, but there is no scoring and you can return to each chapter quiz as many times as needed to reinforce your memory. 

 WHY LEARN ABOUT... LAND-USE CONT ROLS AND PROPERTY DEVELOPMENT?
A client comes to your office, wanting to buy a property for a specific commercial or residential development use. If you are familiar with land-use and property development issues, you will be able to show the client appropriate properties that can be lawfully developed according to the client's plans. If you aren't familiar with these concepts, it will be easy to erroneously assume that any development is legal any-where or that because neighboring properties have been developed in a certain way, a vacant property can be developed the same way. Real estate agents have been successfully sued by buyers who discovered after a sale was closed that their intended use for their new property was prohibited by local law or private restriction. Understanding land-use controls and property development is important for your involvement in real estate.

 LAND-USE CONTROLS
Land use is controlled and regulated through public and private restrictions and through the direct ownership of land by federal, state, and local governments. Over the years, the government's policy has been to encourage private ownership of land.

Home ownership is often referred to as the American Dream. It is necessary, however, for a certain amount of land to be owned by the government for such uses as municipal buildings, state legislative houses, schools, and military stations. Government ownership may also serve the public interest through urban renewal efforts, public housing, and streets and highways. Often, the only way to ensure that enough land is set aside for recreational and conservation purposes is through direct government ownership in the form of national and state parks and forest preserves. Beyond this sort of direct ownership of land, however, most government controls on property occur at the local level.

The states' police power is their inherent authority to create regulations needed to protect the public health, safety, and welfare. The states delegate to counties and local municipalities the authority to enact ordinances in keeping with general laws. The increasing demands placed on finite natural resources have made it necessary for cities, towns, and villages to increase their limitations on the private use of real estate. There are now controls over noise, air, and water pollution as well as population density.

 THE COMPREHENSIVE PLAN
Local governments establish development goals by creating a comprehensive plan. This is also referred to as a master plan. Municipalities and counties develop plans to control growth and development. Each plan includes the municipality's (or other government body's) objectives for the future and the strategies and timing for those objectives to be implemented. For instance, a community may want to ensure that social and economic needs are balanced with environmental and aesthetic concerns. The comprehensive plan usually includes the following basic elements:
► Land use, that is, a determination of how much land may be proposed for residence, industry, business, agriculture, traffic and transit facilities, utilities, community facilities, parks and recreational facilities, floodplains, and areas of special hazards
► Housing needs of present and anticipated residents, including rehabilitation
of declining neighborhoods as well as new residential developments
► Movement of people and goods, including highways and public transit, park
ing facilities, and pedestrian and bikeway systems
► Community facilities and utilities such as schools, libraries, hospitals, recreational facilities, fire and police stations, water resources, sewerage, waste treatment and disposal, storm drainage, and flood management
► Energy conservation to reduce energy consumption and promote the use of renewable energy sources

The preparation of a comprehensive plan involves surveys, studies, and analyses of housing, demographic, and economic characteristics and trends. The municipality's planning activities may be coordinated with other government bodies and private interests to achieve orderly growth and development.

FOR EXAMPLE  After the Great Chicago Fire of 1871 reduced most of the city's downtown to rubble and ash, the city engaged planner Daniel Burnham to lay out a design for Chicago's future. The resulting Burnham Plan of orderly boulevards linking a park along Lake Michigan with other large parks and public spaces throughout the city established an ideal urban space. The plan is still being implemented today.

 ZONING
Zoning ordinances are local laws that implement the comprehensive plan and regulate and control the use of land and structures within designated land-use districts. If the comprehensive plan is the big picture, zoning is the details. Zoning affects such things as
► permitted uses of each parcel of land,
► lot sizes,
► types of structures,
► building heights,
► setbacks (the minimum distance away from streets or sidewalks that structures may be built),
► style and appearance of structures,
► density (the ratio of land area to structure area), and
► protection of natural resources.

Zoning ordinances cannot be static; they must remain flexible to meet the changing needs of society.
 
FOR EXAMPLE      In many large cities, factories and warehouses sit empty. Some cities have begun changing the zoning ordinances for such properties to permit new residential or commercial developments in areas once zoned strictly for heavy industrial use. Coupled with tax incentives, the changes lure developers back into the cities. The resulting housing is modern, conveniently located, and affordable. Simple zoning changes can help revitalize whole neighborhoods in big cities.

No nationwide or statewide zoning ordinances exist. Rather, zoning powers are conferred on municipal governments by state enabling acts. State and federal governments may, however, regulate land use through special legislation such as scenic easement, coastal management, and environmental laws.

Zoning Objectives
Zoning ordinances have traditionally classified land use into residential, commercial, industrial, and agricultural. These land-use areas are further divided into subclasses. For example, residential areas may be subdivided to provide for detached single-family dwellings, semidetached structures containing not more than four dwelling units, walkup apartments, highrise apartments, and so forth.

To meet both the growing demand for a variety of housing types and the need for innovative residential and nonresidential development, municipalities are adopting ordinances for subdivisions and planned residential developments. Some municipalities also use buffer zones, such as landscaped parks and play-grounds, to screen residential areas from nonresidential zones. Certain types of zoning that focus on special land-use objectives are used in some areas. These include
► bulk zoning to control density and avoid overcrowding by imposing restrictions such as setbacks, building heights, and percentage of open area or by restricting new construction projects;
► aesthetic zoning to specify certain types of architecture for new buildings; and
► incentive zoning to ensure that certain uses are incorporated into developments, such as requiring the street floor of an office building to house retail establishments.

Constitutional issues and zoning ordinances.
Zoning can be a highly controversial issue. Among other things, it often raises questions of constitutional law. The preamble of the U.S. Constitution provides for the promotion of the general welfare, but the Fourteenth Amendment prevents the states from depriving "any person of life, liberty, or property, without due process of law." How is a local government to enact zoning ordinances that protect public safety and welfare without violating the constitutional rights of property owners?

Any land-use legislation that is destructive, unreasonable, arbitrary, or confiscatory usually is considered void. Furthermore, zoning ordinances must not violate the various provisions of the constitution of the state in which the real estate is located. Tests commonly applied in determining the validity of ordinances require that the
► power be exercised in a reasonable manner;
► provisions be clear and specific;
► ordinances be nondiscriminatory;
► ordinances promote public health, safety, and general welfare under the police power concept; and
► ordinances apply to all property in a similar manner.

Taking.
The concept of taking comes from the takings clause of the Fifth Amendment to the U.S. Constitution. The clause reads, "nor shall private property be taken for public use, without just compensation." This means that when land is taken for public use through the government's power of eminent domain or condemnation, the owner must be compensated. In general, no land is exempt from government seizure. The rule, however, is that the government cannot seize land without paying for it. This payment is referred to as just compensation—compensation that is just, or fair.

Inverse condemnation is an action brought by a property owner seeking just compensation for land taken for a public use where it appears that the taker of the property does not intend to bring eminent domain proceedings. The property is condemned because its use and value have been diminished due to an adjacent property's public use, such as an airport or highway. For example, property along a newly constructed highway may be inversely condemned. While the property itself was not used in constructing the highway, the property's value may be significantly diminished due to the construction of the highway close to the property. The property owner may bring an inverse condemnation action to be compensated for the loss.

It is sometimes very difficult to determine what level of compensation is fair in any particular situation. The compensation may be negotiated between the owner and the government, or the owner may seek a court judgment setting the amount.

IN PRACTICE    One method used to determine just compensation is the before-and-after method. This method is used primarily where a portion of an owner's property is seized for public use. The value of the owner's remaining property after the taking is subtracted from the value of the whole parcel before the taking. The result is the total amount of compensation due to the owner.

Zoning Permits
Zoning laws are generally enforced through the use of permits. Compliance with zoning can be monitored by requiring that property owners obtain permits before they begin any development. A permit will not be issued unless a proposed development conforms to the permitted zoning, among other requirements. Zoning permits are usually required before building permits can be issued.

Zoning hearing board.
Zoning hearing boards (or zoning boards of appeal) have been established in most communities to hear testimony (positive and negative) about the effects a zoning ordinance may have on specific parcels of property. Petitions for variances or exceptions to the zoning law may be presented to an appeal board.

Nonconforming use.
Frequently, a lot or an improvement does not conform to the zoning use because it existed before the enactment or amendment of the zoning ordinance. Such a nonconforming use may be allowed to continue legally as long as it complies with the regulations governing nonconformities in the local ordinance, or until the improvement is destroyed or torn down, or until the current use is abandoned. If the nonconforming use is allowed to continue indefinitely, it is considered to be grandfathered into the new zoning.

FOR EXAMPLE     Under Pleasantville's old zoning ordinances, the C&E Store was well within a commercial zone. When the zoning map was changed to accommodate an increased need for residential housing in Pleasantville, C&E was grandfathered into the new zoning; that is, it was allowed to continue its successful operations, even though it did not fit the new zoning rules.

Variances and conditional-use permits.
Each time a plan or zoning ordinance is enacted, some property owners are inconvenienced and want to change the use of their property. Generally, these owners may appeal for either a conditional-use permit or a variance to allow a use that does not meet current zoning requirements.

A conditional-use permit (also known as a special-use permit) usually is granted to a property owner to allow a special use of property that is defined as an allowable conditional use within that zone, such as a house of worship or day-care center in a residential district. For a conditional-use permit to be appropriate, the intended use must meet certain standards set by the municipality.

A variance, on the other hand, permits a landowner to use his or her property in a manner that is strictly prohibited by the existing zoning. Variances provide relief if zoning regulations deprive an owner of the reasonable use of his or her property. To qualify for a variance, the owner must demonstrate the unique circumstances that make the variance necessary. In addition, the owner must prove that he or she is harmed and burdened by the regulations. A variance might also be sought to provide relief if existing zoning regulations create a physical hardship for the development of a specific property. For example, if an owner's lot is level next to a road, but slopes steeply 30 feet away from the road, the zoning board may allow a variance so the owner can build closer to the road than the setback allows.

Both variances and conditional-use permits are issued by zoning boards only after public hearings. The neighbors of a proposed use must be given an opportunity to voice their opinions.

A property owner also can seek a change in the zoning classification of a parcel of real estate by obtaining an amendment to the district map or a zoning ordinance for that area, that is, the owner can attempt to have the zoning changed to accommodate his or her intended use of the property. The proposed amendment must be brought before a public hearing on the matter and approved by the governing body of the community.

 BUILDING CODES AND CERTIFICATES OF OCCUPANCY
Most municipalities have enacted ordinances to specify construction standards that must be met when repairing or erecting buildings. These are called building codes, and they set the requirements for kinds of materials and standards of workmanship, sanitary equipment, electrical wiring, fire prevention, and the like.

A property owner who wants to build a structure or alter or repair an existing building usually must obtain a building permit. Through the permit requirement, municipal officials are made aware of new construction or alterations and can verify compliance with building codes and zoning ordinances. Inspectors will closely examine the plans and conduct periodic inspections of the work. Once the completed structure has been inspected and found satisfactory, the municipal inspector issues a certificate of occupancy or occupancy permit.

If the construction of a building or an alteration violates a deed restriction (discussed later in this Chapter), the issuance of a building permit will not cure this violation. A building permit is merely evidence of the applicant's compliance with municipal regulations.

Similarly, communities with historic districts, or those that are interested in maintaining a particular "look" or character, may have aesthetic ordinances. These laws require that all new construction or restorations be approved by a special board. The board ensures that the new structures will blend in with existing building styles. Owners of existing properties may need to obtain approval to have their homes painted or remodeled.

IN PRACTICE    The subject of planning, zoning, and restricting the use of real estate is extremely technical, and the interpretation of the law is not always clear. Questions concerning any of these subjects in relation to real estate transactions should be referred to legal counsel. Furthermore, the landowner should be aware of the costs for various permits.

 SUBDIVISION
Most communities have adopted subdivision and land development ordinances as part of their comprehensive plans. An ordinance includes provisions for submitting and processing subdivision plats. A major advantage of subdivision ordinances is that they encourage flexibility, economy, and ingenuity in the use of land. A subdivider is a person who buys undeveloped acreage and divides it into smaller lots for sale to individuals or developers or for the subdivider's own use. A developer (who may also be a subdivider) improves the land, constructs homes or other buildings on the lots, and sells them. Developing is generally a much more extensive activity than subdividing.

Regulation of Land Development
Just as no national zoning ordinance exists, no uniform planning and land development legislation affects the entire country. Laws governing subdividing and land planning are controlled by the state and local governing bodies where the land is located. Rules and regulations developed by government agencies have, however, provided certain minimum standards. Many local governments have established standards that are higher than the minimum standards.
 
Land development plan.
Before the actual subdividing can begin, the subdivider must go through the process of land planning. The resulting land development plan must comply with the municipality's comprehensive plan. Although comprehensive plans and zoning ordinances are not necessarily inflexible, a plan that requires them to be changed must undergo long, expensive, and frequently complicated hearings.

Plats.
From the land development and subdivision plans, the subdivider draws plats. A plat is a detailed map that illustrates the geographic boundaries of individual lots. It also shows the blocks, sections, streets, public easements, and monuments in the prospective subdivision. A plat also may include engineering data and restrictive covenants. The plats must be approved by the municipality before they can be recorded. (See Figure 9.11 in Chapter 9 for an example of a subdivision plat map.) A developer is often required to submit an environmental impact report with the application for subdivision approval. This report explains what effect the proposed development will have on the surrounding area.

Subdivision Plans
In plotting out a subdivision according to local planning and zoning controls, a subdivider usually determines the size as well as the location of the individual lots. The maximum or minimum size of a lot is generally regulated by local ordinances and must be considered carefully.

The land itself must be studied, usually in cooperation with a surveyor, so that the subdivision takes advantage of natural drainage and land contours. A subdivider should provide for utility easements as well as easements for water and sewer mains.

Most subdivisions are laid out by use of lots and blocks. An area of land is designated as a block, and the area making up this block is divided into lots.

One negative aspect of subdivision development is the potential for increased tax burdens on all residents, both inside and outside the subdivision. To protect local taxpayers against the costs of a heightened demand for public services, many local governments strictly regulate nearly all aspects of subdivision development.

Subdivision Density
Zoning ordinances control land use. Such control often includes minimum lot sizes and population density requirements for subdivisions and land developments. For example, a typical zoning restriction may set the minimum lot area on which a subdivider can build a single-family housing unit at 10,000 square feet. This means that the subdivider can build four houses per acre. Many zoning authorities now establish special density zoning standards for certain subdivisions. Density zoning ordinances restrict the average maximum number of houses per acre that may be built within a particular subdivision. If the area is density zoned at an average maximum of four houses per acre, for instance, the sub-divider may choose to cluster building lots to achieve an open effect. Regardless of lot size or number of units, the sub-divider will be consistent with the ordinance as long as the average number of units in the development remains at or below the maximum density. This average is called gross density.