Real estate acquisition fraught with hidden risks

The acquisition of real estate has always been a potential problem for the unwary. Whether for business or residence, it frequently represents one of the larger investments that one faces.

In most counties and in most, if not all, cities there are now zoning laws and often building codes and subdivision laws, all of which, if not complied with, can cause the buyer to have serious problems.

Zoning laws have much to say about how land may be used, how much of the land must be left in greenspace, how far buildings must be placed from the neighbors' property, etc. Thus, even if all other things are right with a particular tract of land, the buyer needs to make sure that, under the local zoning laws, the buyer will be able to build what he would like to build, at the place he would like to build it, for the purpose he would like to use it.

Most zoning laws divide the governmental jurisdiction into a series of districts, each district having its own zoning classification, and within that classification the property owner is able to conduct several different kinds of uses which are thought to be compatible.

In some of the counties in this area, such as Christian County, there is an entirely different zoning approach. Instead of dividing the county into zoning districts, the county essentially allows only two types of activities without a special permit which may require a hearing before the county planning commission. The two types of activities allowed without a special hearing are agricultural and limited single-family residential. A special zoning permit is required for any other use.

The planned district is also popular. This means that the property has been given its own special zoning classification with its own set of rules. Obviously, a buyer within a planned district area will want to be clear on what special rules the local government has imposed upon that particular planned district.

Local government, when rezoning property, will often impose special conditions that have to be met. Proof of compliance with these conditions can require such things as providing engineering reports to the local government for approval or dedication of land to the public. The conditions may include the filing of special covenants which are a contract between the people who buy the land in the area that has been specially zoned.

These contracts typically provide that the city or the local county government may enforce the covenants. Those rules do not necessarily appear in the city zoning law or county zoning law, but must be determined by following up on how the property was zoned and securing a copy of the special rules from the local office where the land records are maintained.

In new developments it is common to impose on the development the obligation of constructing and maintaining stormwater detention facilities. These facilities are intended to prevent increased flooding downstream.

However, the facilities are normally retained as private facilities and are required by the local government to be maintained by the people in the area from which water drains into the detention facility. For that reason, it is common that local governments require special covenants be filed that require an owners association meet and assess itself annually to maintain the detention facilities. In the event that they do not, the community may have the authority to step in, maintain the detention facility and charge the property owners a special tax to do so. Obviously, a buyer would want to know of those obligations.

Building codes place buildings into use groups based on the intended use of the building. A buyer of a building who plans to change the building may find that the building has to undergo substantial modifications to meet the building code requirements for that use group.

Fire prevention requirements may be triggered when going from one use group to another because the potential for fire or explosion is greater with the materials that will be used in the new facility, or because the new facility invites the general public to use the facilities where the old use did not.

Related matters, such as access for people with disabilities, may mean that a building which was useful before needs to be substantially renovated in order to be used now. Elevators may need to be installed where only stairways were available to the second floor. Ramps may be need to be placed in order to gain access to entries. Restrooms may need to be modified in order to provide for wheelchair access, etc.

All of these things may be desirable, but they are also expensive and may make a difference as to whether a buyer wishes to acquire the building. Most cities have building codes, and some counties in Missouri have building codes. A check with building officials, particularly if you are acquiring an older building and intend to change its use, is highly desirable to protect the buyer from unforeseen expenses in remodeling.

A buyer who finds that the property for sale is part of a larger tract needs to be concerned because the property may not be legally subject to sale until the property has been subdivided and approved by the local government agency. This may require several months of effort, engineering fees, the dedication of roadways and utility easements, and the construction of public improvements, such as roadways, sidewalks, detention facilities, etc.

I would encourage any buyer, regardless of disclosures or other such matters, to check with the local government agency. If the property is located in a city, it is normally sufficient to check with the city officials. If the property is outside a city, then one would go to the county officials.

While many real estate transactions are accomplished day after day with no problem, there are those where problems arise which previous inquiry would have disclosed. The inquiries I am suggesting are good insurance against severe problems.

If you have any reason whatsoever to be concerned about your real estate purchase, spend a little time and a little effort checking with your attorney and with local government officials, or let your attorney do that for you. Make sure that you are getting what you want, can use it for what you want, and will not be required to spend a great deal of additional and unexpected funds to do so.

(Don Busch is a practicing attorney with the Springfield law firm of Miller & Sanford. Information and opinions expressed in the "Letter of the Law" column should not be construed as legal advice. For counseling on specific legal situations, please consult an attorney.)