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Real Estate Investment Software Blog

Grandfather provisions are allowed violations to current zoning ordinances or building codes because the existing rental property structure was built prior to the existing rules and regulations.

These provisions can present hidden hazards for real estate investors because while they may be allowed now, a needed change in the building (desired expansion, repair, or rebuilding due to a fire or other casualty) may require that the entire structure meet the current rules and regulations.

The only protection a real estate investor has to ensure against these hidden hazards is to follow these three steps.

1. Ask the listing agent in writing whether he or she is aware of any conditions that are “grandfathered in” that would otherwise be building code or zoning ordinance violations. Be sure to expect an answer in writing.
2. Insert a provision in the offer to purchase that the seller warrants there are no conditions that are grandfathered in which would otherwise be building code or zoning ordinance violations.
3. Request an inspection from the local governing building department for them to attest in writing that no zoning or building code violations exist, grandfathered in or not.

Grandfather provisions surrounding residential and commercial real estate are not overly common, yet they do exist. Whether you are about to purchase an apartment, office, or retail center, be sure to do your homework before you close the deal. Otherwise, you might discover an issue you didn’t bargain for and regret making the real estate investment later.