© 2011 Rockwell Publishing Washington Real Estate Fundamentals Lesson 5: Public Restrictions on...

© 2011 Rockwell Publishing

Washington Real Estate Fundamentals

Lesson 5:

Public Restrictions on Land


Public Restrictions on LandIntroduction

Private property ownership affected by public restrictions on land:

land use control lawspower of eminent domaintaxation


Land Use ControlsPolice power

Basis for land use control laws: police power.

Police power: State’s power to impose laws necessary for protection of public health, safety, morals, and general welfare.

Allows government to regulate owner’s use of private property.

State delegates police power to local governments.


Land Use ControlsConstitutional requirements

To be constitutional, land use regulation must:be reasonably related to public health,

safety, morals, or general welfarebe nondiscriminatorynot reduce property value so much that

regulation amounts to confiscationprotect public from harm


Land Use ControlsTypes

Land use control laws include:comprehensive planning lawszoning ordinancesbuilding codessubdivision regulationsenvironmental laws


Land Use ControlsComprehensive 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 densitybuilding intensity transportation


Comprehensive PlanningImplemented by zoning

Community’s general plan implemented by:police powerpower of eminent domain

Zoning can’t conflict with general plan.


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.


Land Use ControlsZoning

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.


ZoningUse 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.


Zoning ordinances often:establish minimum lot sizeslimit building heightsset setback and sideyard rules (minimum

distances from property lines for buildings)limit how much of lot building can cover

ZoningOther rules


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.

ZoningOther rules


ZoningExceptions

Generally must apply zoning law in same manner to all property owners within zone.

But some exceptions or changes to rules allowed:

nonconforming usesvariancesconditional usesrezones


Zoning ExceptionsNonconforming uses

Nonconforming use: Existing building or use that doesn’t comply with new zoning.

Nonconforming uses are generally “grandfathered in” and allowed to continue.


Although allowed to continue, nonconforming uses can’t be:

expandedrebuilt after destructionresumed after abandonment

Property can be sold, but new owner subject to same restrictions.

Nonconforming UsesRestrictions


Zoning ExceptionsVariances

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.


Zoning ExceptionsConditional uses

Conditional use: Use inconsistent with neighborhood’s 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.


ZoningRezones

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.


• Police power• Comprehensive planning• Growth Management Act• Zoning• Cluster zoning• Nonconforming use• Variance• Conditional use• Rezone

SummaryPlanning and Zoning


Land Use ControlsBuilding 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.


Building CodesPermits

Compliance with building codes:carried out through building permit systemenforced by building inspectors

Finished building inspected, and certificate of occupancy issued if every aspect of building complies with codes.


Building CodesOlder properties

Owners may be required to bring old buildings “up to code” when new rules imposed.


Land Use ControlsSubdivision laws

Local governments also implement general plans by regulating new subdivision development.

Subdivision: Division of one parcel into two or more parcels.


Subdivision LawsTwo 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.


Subdivision LawsSubdivision 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 limitsproperty within one mile of city


Subdivision ApprovalPlat map requirements

Plat map must have:legal description of land to be subdividedstatement of landowner’s consent to

subdivisionprovisions for required statutory

dedications (for streets, open space, etc.)


Subdivision ApprovalChanges may be required

City or county may approve plat as submitted, or require changes.

Subdivider can’t sell any lots until plat is approved.


Consumer protection laws regarding subdivisions include state law and federal law:

Washington Land Development Act

Interstate Land Sales Full Disclosure Act

Subdivision LawsConsumer protection laws


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 LawsWashington Land Development Act


Land Development ActPublic offering statement

Subdivision developer must give buyers public offering statement disclosing:

liens and other encumbrances property’s physical condition compliance with land use laws warranties

Buyer has right of rescission for two days after receiving statement.


Subdivision LawsILSFDA

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.


• Building codes• Building permit• Certificate of occupancy• Subdivision approval procedures• Plat map• Washington Land Development Act • Public offering statement• ILSFDA

SummaryBuilding Codes and Subdivision Laws


Land Use ControlsEnvironmental laws

Environmental laws: Laws intended to preserve the physical environment.

May be federal, state, or local.


Environmental LawsShoreline 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.


Environmental LawsNEPA

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.


Environmental LawsSEPA

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.


Environmental LawsCERCLA

Comprehensive Environmental Response, Compensation, and Liability Act: Federal law concerning liability for environmental cleanup costs.

Enforced by federal Environmental Protection Agency (EPA).


If property contaminated with hazardous waste:

CERCLA may require current owner to pay for cleanup

even if contamination caused by previous owner or tenant

CERCLALandowner’s liability


Environmental LawsEnvironmental hazards

Agents should be aware of dangers posed by:

asbestosurea formaldehyderadonlead-based paintunderground storage tanksillegal drug manufacturingmoldgeologic hazards


• CERCLA• NEPA• Environmental impact statement• SEPA• Shoreline Management Act• Environmental hazards

SummaryEnvironmental Laws


Public Restrictions on LandEminent 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).


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 DomainCondemnation process


Eminent domain is government’s right to take private property for public use.

Police power is government’s right to regulate private property for public good.

Eminent DomainComparison with police power


Public Restrictions on LandTaxation of real property

Three types of real property taxes:

General real estate taxes

Special assessments

Real estate excise tax


Taxation of Real PropertyGeneral 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 property’s value.

Also called ad valorem taxes (“according to value”).


General Real Estate TaxesTax 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.


General Real Estate TaxesPayment 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.


General Real Estate TaxesExemptions

Exempt from taxation (examples):publicly owned propertyproperty used for church purposesnonprofit hospitals and schools

There are also some partial exemptions.Example: low-income homeowners who

are 61 or older, or retired due to disability.


General Real Estate TaxesOpen 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.


Taxation of Real PropertySpecial 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.


General Real Estate Taxes

Pay for ongoing services

Levied against all non-exempt property

Levied annually

Based on property value

Taxation of Real PropertyComparison

Special Assessment

Pays for one project

Levied only against properties that benefit

One-time charge

Based on cost of project and benefit received


Taxation of Real PropertyReal 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 stateadditional percentage owed to local

government; amount varies by city or county


Seller legally responsible for payment of tax.But tax collected when buyer’s deed

recorded.Deed won’t 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 TaxPayment of excise tax


• Eminent domain• Condemnation• Just compensation• Ad valorem taxes• Assessment• Tax exemption• Special assessment• Real estate excise tax

SummaryEminent Domain and Taxation

© 2011 Rockwell Publishing Washington Real Estate Fundamentals Lesson 5: Public Restrictions on...

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