A fundamental doctrine of property law is to utilize property for its highest and best use. However, what if the highest and best use of the property is not enough? Fortunately, sellers can leverage a powerful tool to increase the value of their property: rezoning. By rezoning a property to a district that will allow more uses, sellers can unlock a property’s full potential and, thus, a “higher and better” value for the buyer.
How could a rezoning help my client?
Consider a scenario where a parcel of land is zoned Agriculture but located on a high-traffic road. Rezoning the parcel to a district that allows commercial or residential development can significantly increase its value because your pool of buyers just changed from Farmer Frank to Developer Dan or Retail Ron. Developer Dan sees the value of the new residential zoning district because he knows how much he can make on his homes and does not have to go through the rezoning himself. Similarly, Retail Ron is a chain store with deep pockets. You have now opened up a great new site for his next retail store. The result is a win/win. The sale will yield more profit for the seller, and the buyer can use the property for the desired purpose without having to complete the rezoning process.
The rezoning process can streamline the transaction for the buyer and allow for a shorter due diligence period. For example, the seller completes many of the studies that a buyer would typically conduct, such as environmental reports or endangered species reports during the rezoning process. Such reports may be recertified to the buyer, reducing costs and potentially allowing for a higher asking price from your seller.
What goes into the process of rezoning property?
The rezoning process involves an application with the local government and final approval from the City or County Commission. Rezoning can be done with or without a site plan, each with advantages and disadvantages. If the City or County Commission approves the rezoning with a site plan, the buyer can step into the sellers’ position and continue with the development process. This option may appeal to some larger institutional buyers. On the other hand, rezoning without a site plan can be less expensive for the seller and gives the buyer more options for how to develop the property.
Through rezoning, sellers can unlock the potential of a property, attract a wider range of buyers, and create a more streamlined transaction process. For more information on rezoning, contact your trusted land use attorney.
