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© 2011 Rockwell Publishing Washington Real Estate Fundamentals Lesson 5: Public Restrictions on Land
© 2011 Rockwell Publishing Public Restrictions on Land Introduction Private property ownership affected by public restrictions on land: land use control laws power of eminent domain taxation
© 2011 Rockwell Publishing Land Use Controls Police power Basis for land use control laws: police power. Police power: States power to impose laws necessary for protection of public health, safety, morals, and general welfare. Allows government to regulate owners use of private property. State delegates police power to local governments.
© 2011 Rockwell Publishing Land Use Controls Constitutional requirements To be constitutional, land use regulation must: be reasonably related to public health, safety, morals, or general welfare be nondiscriminatory not reduce property value so much that regulation amounts to confiscation protect public from harm
© 2011 Rockwell Publishing Land Use Controls Types Land use control laws include: comprehensive planning laws zoning ordinances building codes subdivision regulations environmental laws
© 2011 Rockwell Publishing Land Use Controls Comprehensive planning Comprehensive plan: Long-term development plan adopted by local government. Also called general plan or master plan. Often prepared by planning commission. Addresses issues such as: population density building intensity transportation
© 2011 Rockwell Publishing Comprehensive Planning Implemented by zoning Communitys general plan implemented by: police power power of eminent domain Zoning cant conflict with general plan.
© 2011 Rockwell Publishing Comprehensive Planning Growth Management Act In Washington, local planning governed by Growth Management Act. Requires new development to be concentrated next to existing urbanized areas, to reduce sprawl.
© 2011 Rockwell Publishing Land Use Controls Zoning Zoning ordinance: Law that divides community into land use zones, with only certain types of uses allowed in each zone. Separates residential, commercial, industrial, and agricultural uses. Areas zoned for incompatible uses may be separated by undeveloped areas called buffers.
© 2011 Rockwell Publishing Zoning Use categories The zones created by zoning laws usually have subcategories. Example: residential zone divided into single-family, one-to-four unit buildings, and multi-family.
© 2011 Rockwell Publishing Zoning ordinances often: establish minimum lot sizes limit building heights set setback and sideyard rules (minimum distances from property lines for buildings) limit how much of lot building can cover Zoning Other rules
© 2011 Rockwell Publishing Cluster zoning: Zoning ordinance may allow developments to have smaller lot sizes and setbacks in exchange for providing more shared green space. Allows higher density. Called planned unit developments or rural cluster developments. Zoning Other rules
© 2011 Rockwell Publishing Zoning Exceptions Generally must apply zoning law in same manner to all property owners within zone. But some exceptions or changes to rules allowed: nonconforming uses variances conditional uses rezones
© 2011 Rockwell Publishing Zoning Exceptions Nonconforming uses Nonconforming use: Existing building or use that doesnt comply with new zoning. Nonconforming uses are generally grandfathered in and allowed to continue.
© 2011 Rockwell Publishing Although allowed to continue, nonconforming uses cant be: expanded rebuilt after destruction resumed after abandonment Property can be sold, but new owner subject to same restrictions. Nonconforming Uses Restrictions
© 2011 Rockwell Publishing Zoning Exceptions Variances Variance: Special authorization to build structure or use property in way that is generally prohibited. Owner required to show that law creates undue hardship or practical difficulties. Usually only minor deviation authorized.
© 2011 Rockwell Publishing Zoning Exceptions Conditional uses Conditional use: Use inconsistent with neighborhoods zoning that is allowed under specified conditions. Examples: school, hospital, place of worship, cemetery Conditions address parking and other issues, to mitigate impact on neighborhood. Also called a special exception.
© 2011 Rockwell Publishing Zoning Rezones Rezone: Amendment of zoning ordinance. Property owner may request rezone. May have to show circumstances have changed since zoning adopted. Public hearing must be held and surrounding landowners notified. Downzoning: Area rezoned more restrictively. Upzoning: Area rezoned less restrictively.
© 2011 Rockwell Publishing Police power Comprehensive planning Growth Management Act Zoning Cluster zoning Nonconforming use Variance Conditional use Rezone Summary Planning and Zoning
© 2011 Rockwell Publishing Land Use Controls Building codes Establish minimum standards for construction. Require builders to use particular methods and materials. Protect public against dangers caused by unsafe design, substandard materials, or poor workmanship.
© 2011 Rockwell Publishing Building Codes Permits Compliance with building codes: carried out through building permit system enforced by building inspectors Finished building inspected, and certificate of occupancy issued if every aspect of building complies with codes.
© 2011 Rockwell Publishing Building Codes Older properties Owners may be required to bring old buildings up to code when new rules imposed.
© 2011 Rockwell Publishing Land Use Controls Subdivision laws Local governments also implement general plans by regulating new subdivision development. Subdivision: Division of one parcel into two or more parcels.
© 2011 Rockwell Publishing Subdivision Laws Two types Two types of subdivision laws: Local laws concerning procedures for getting subdivision plans approved. Consumer protection laws requiring developers to make disclosures to lot buyers.
© 2011 Rockwell Publishing Subdivision Laws Subdivision approval procedures Counties set requirements for physical aspects of subdivisions. Access roads, utilities, lot size, etc. Developer must submit proposed plat map to county for approval. Plat must also be submitted to city if: property within city limits property within one mile of city
© 2011 Rockwell Publishing Subdivision Approval Plat map requirements Plat map must have: legal description of land to be subdivided statement of landowners consent to subdivision provisions for required statutory dedications (for streets, open space, etc.)
© 2011 Rockwell Publishing Subdivision Approval Changes may be required City or county may approve plat as submitted, or require changes. Subdivider cant sell any lots until plat is approved.
© 2011 Rockwell Publishing Consumer protection laws regarding subdivisions include state law and federal law: Washington Land Development Act Interstate Land Sales Full Disclosure Act Subdivision Laws Consumer protection laws
© 2011 Rockwell Publishing Requires subdivision developers to make disclosures to prospective buyers. Applies to sale or advertising of 26 or more unimproved lots to general public as part of common promotional plan. Applies to any subdivision promoted in Washington, even if property outside state. Subdivision Laws Washington Land Development Act
© 2011 Rockwell Publishing Land Development Act Public offering statement Subdivision developer must give buyers public offering statement disclosing: liens and other encumbrances propertys physical condition compliance with land use laws warranties Buyer has right of rescission for two days after receiving statement.
© 2011 Rockwell Publishing Subdivision Laws ILSFDA Interstate Land Sales Full Disclosure Act: Federal law affecting sale or lease of vacant lots across state lines. Anti-fraud protections: for subdivisions with 25 or more unimproved lots. Require disclosures, prohibit misleading sales practices. Registration with HUD: for subdivisions with 100 or more unimproved lots.
© 2011 Rockwell Publishing Building codes Building permit Certificate of occupancy Subdivision approval procedures Plat map Washington Land Development Act Public offering statement ILSFDA Summary Building Codes and Subdivision Laws
© 2011 Rockwell Publishing Land Use Controls Environmental laws Environmental laws: Laws intended to preserve the physical environment. May be federal, state, or local.
© 2011 Rockwell Publishing Environmental Laws Shoreline Management Act Shoreline Management Act: State law protecting shorelines by regulating development within 200 feet of high water mark. Applies to coastal shorelines, shores of larger lakes and streams in Washington.
© 2011 Rockwell Publishing Environmental Laws NEPA National Environmental Policy Act: Requires environmental impact statement (EIS) before federal government undertakes project with significant impact. EIS also required for private uses or developments that must have federal agency approval.
© 2011 Rockwell Publishing Environmental Laws SEPA State Environmental Protection Act: State law similar to NEPA. Requires EIS for projects with significant environmental impact. Applies to projects by state or local governments. Also applies to private projects that require approval of state, county, or city agency.
© 2011 Rockwell Publishing Environmental Laws CERCLA Comprehensive Environmental Response, Compensation, and Liability Act: Federal law concerning liability for environmental cleanup costs. Enforced by federal Environmental Protection Agency (EPA).
© 2011 Rockwell Publishing If property contaminated with hazardous waste: CERCLA may require current owner to pay for cleanup even if contamination caused by previous owner or tenant CERCLA Landowners liability
© 2011 Rockwell Publishing Environmental Laws Environmental hazards Agents should be aware of dangers posed by: asbestos urea formaldehyde radon lead-based paint underground storage tanks illegal drug manufacturing mold geologic hazards
© 2011 Rockwell Publishing CERCLA NEPA Environmental impact statement SEPA Shoreline Management Act Environmental hazards Summary Environmental Laws
© 2011 Rockwell Publishing Public Restrictions on Land Eminent domain Eminent domain: Power of government to take private property for public use. Government must pay owner just compensation (fair market value). Government may delegate power of eminent domain to companies that provide public service (utilities, railroads).
© 2011 Rockwell Publishing Condemnation: Process for exercising power of eminent domain. Government first offers to buy property. If owner refuses to sell or demands too high a price, government files condemnation lawsuit. Court will condemn property and order it to be sold to government at fair market value. Eminent Domain Condemnation process
© 2011 Rockwell Publishing Eminent domain is governments right to take private property for public use. Police power is governments right to regulate private property for public good. Eminent Domain Comparison with police power
© 2011 Rockwell Publishing Public Restrictions on Land Taxation of real property Three types of real property taxes: General real estate taxes Special assessments Real estate excise tax
© 2011 Rockwell Publishing Taxation of Real Property General real estate taxes General real estate taxes: Annual taxes on real property, used to pay for government operating costs and services. Amount of tax owed based on propertys value. Also called ad valorem taxes (according to value).
© 2011 Rockwell Publishing General Real Estate Taxes Tax assessment Assessment: Valuation of property for tax purposes. Must be assessed at 100% of true and fair value (market value). Real property in Washington assessed each year on January 1. Owner can appeal assessment to county Board of Equalization.
© 2011 Rockwell Publishing General Real Estate Taxes Payment and default Taxes levied in October of each year, payable the following year. Half due by April 30, half by October 31. County can foreclose when taxes have been delinquent for three years. Owner can redeem property before sale by paying delinquent taxes, interest, and other accumulated costs.
© 2011 Rockwell Publishing General Real Estate Taxes Exemptions Exempt from taxation (examples): publicly owned property property used for church purposes nonprofit hospitals and schools There are also some partial exemptions. Example: low-income homeowners who are 61 or older, or retired due to disability.
© 2011 Rockwell Publishing General Real Estate Taxes Open space Land that qualifies as open space eligible for assessment at value as currently used (rather than its value if developed). Results in lower assessment. Provides incentive to preserve property as open space instead of developing it. Example of how taxation can be used for land use control.
© 2011 Rockwell Publishing Taxation of Real Property Special assessments Special assessment: Tax levied against properties benefiting from public improvement (such as street paving). Also called improvement tax. Can usually be paid in installments. Creates lien, so government can foreclose if assessment not paid.
© 2011 Rockwell Publishing General Real Estate Taxes Pay for ongoing services Levied against all non-exempt property Levied annually Based on property value Taxation of Real Property Comparison Special Assessment Pays for one project Levied only against properties that benefit One-time charge Based on cost of project and benefit received
© 2011 Rockwell Publishing Taxation of Real Property Real estate excise tax Real estate excise tax: Tax on sale of real property, based on selling price. Current rate: 1.28% of selling price owed to the state additional percentage owed to local government; amount varies by city or county
© 2011 Rockwell Publishing Seller legally responsible for payment of tax. But tax collected when buyers deed recorded. Deed wont be recorded unless tax paid. Also, failure to pay tax creates lien against property. So buyer must be sure to collect excise tax from seller at closing. Real Estate Excise Tax Payment of excise tax
© 2011 Rockwell Publishing Eminent domain Condemnation Just compensation Ad valorem taxes Assessment Tax exemption Special assessment Real estate excise tax Summary Eminent Domain and Taxation
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