What Is Spot Zoning?

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Spot zoning is when a city council changes the zoning for a single property that is different from the surrounding properties. Find out how cities zone land for residences, businesses and retail with information from a mortgage specialist in this free video on zoning.

Part of the Video Series: Real Estate Financing
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Video Transcript

Hi, my name is Stetson Lowe, and in this clip, we're going to be talking about spot zoning, what it is, and how it may apply to you. A spot zoning is...well, first, we need to understand what zoning is. Cities adopt what's called master plans of what...where they want commercial industry to be, industrial industry, such as a steel plant. Commercial would be more offices and warehouses, light warehouses. And then you have commercial retail, which is your shopping centers and restaurants -- things like that. Then they break it down into residential where they want single-family dwellings of a certain size, single-family dwellings of a bigger size with certain lot specifications and sizes that they require. Also, they'll specify where they may want apartments and, you know, two to four family duplexes and four-plexes. Occasionally, though, you'll find a place where an apartment gets approved in the middle of some residence. I actually own a four-plex that is...was built in the middle of a single-family residence neighborhood, and that required a spot zoning change. So whoever the guy was that built that four-plex, he went to the city and made a pretty good case as to why he thinks they should make a spot zone change and allow for a four-plex to be built there. The city would typically go before the city council and vote on that, and if you get approved for a spot zoning change, then they will make that change and allow for you to obtain a building permit to build something that's not zoned for that location. Something to look for on something that may not be zoned properly is if it's legal but non-conforming. You might, before purchasing a property, check and get what's called a rebuild letter. If a property were to buy down...or burn down, would they allow you to rebuild that same property there or would they...would it revert back to the old zoning ordinance? Might not be a good idea to buy something that they wouldn't allow you to rebuild. Therefore, if you lose your asset in a fire or storm or something, they wouldn't allow you to rebuild that same asset and you might be stuck with a piece of property that is less valuable than what you paid for. So that's spot zoning in a nutshell, and hope that helps.

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