The PAR Legal Hotline gets lots of calls (6,500-7,000 per year) about lots of topics, which means we give lots of answers. One of the most common answers is, “Your client should talk to a [someone other than you] about that issue.” It’s usually a real estate attorney, but it might also be a lender, a closing company, an inspector or an accountant — the list goes on. But for the purposes of this article, it’s a zoning officer.
If I’m being honest, we sometimes take flak from callers who want to be able to deliver a neatly tied-up answer to their client’s problem. But “they’ll need to talk to someone else” is still usually the right answer — for us and for you — because some issues are truly outside the scope of what you can and should answer for your clients. Sending the clients to their own experts not only reduces your (and your broker’s) risk should someone later decide to sue because they didn’t like your answer, but it probably gets your client a better and more complete answer than you (or we) could provide.
For example, take a look at this article about a recent planning commission meeting. Buyers purchased a home for their son to live in during college but only realized after the fact that the college generally didn’t permit off-campus housing. Apparently, they didn’t think to check on that first, and nobody else suggested that they do so. But that’s not the worst part.
Looking to pivot to a new plan, the buyers decided to fix the place up to use for short-term rentals. Except, according to the buyers’ attorney, “the couple’s real estate agent allegedly misinformed them that vacation rentals such as those arranged via the Airbnb website are permitted at the site” when the location was not just outside of a zoning district that permitted such uses, but inside a district that specifically prohibited them.
Now to be clear, I have no knowledge of what the agent did or did not actually say to the buyers, or when in the transaction these statements were allegedly made, so I’ll use a different hypothetical transaction here. Let’s say that you’re representing a buyer who sees a property and asks you, “Do you think I could run a daycare from this property?”
Answering with a yes or no might feel like you’re helping your client with a decisive response… but you’re a real estate agent, not a zoning officer, so it’s probably better to send them to the expert rather than trying to be the expert. When faced with a question like “Can I use the property in a certain way?” the answer should almost never be a yes or a no but should be more like, “Let me help you figure out how to check with the zoning office, and you can talk to an attorney if you have any questions after that.”
In fact, we have Agreement of Sale contingencies for just this purpose. The residential Agreement of Sale (Form ASR) has a “Deeds, Restrictions and Zoning” inspection contingency which allows buyers to check out zoning ordinances and make sure that the current use of the property is permitted (e.g., is the property zoned to allow for the daycare that’s currently in the property, or is it just that the current owner hasn’t been caught yet?).
That clause mentions that buyers could also make the contract contingent on an anticipated use. How might you do that, you wonder? PAR also has a Zoning Approval Contingency Addendum (Form ZA) with two options. The first option allows buyers to verify their proposed use of the property (e.g., could the buyer start a day care in the property if they wanted to?) and terminate if the current zoning doesn’t permit that use. The second option gives the buyers a certain timeframe to seek a zoning change that would allow for their proposed use (e.g., buyers want to get a special exception that would allow them to run a daycare in the property) and to then terminate if that change is not granted.
And to be blunt, make sure you CYA in these sorts of situations to ensure that the client doesn’t “accidentally forget” that you advised them of their options. Be sure that you are on record — ideally in writing, preferably in more than a shorthand text message — having directed them to the appropriate municipal resources and recommending the relevant contingency options. Whether the client uses the resources and options you provide is up to them, but don’t take that liability on yourself by going outside of your role as a licensee.