Whether you’ve always dreamed of living above your own shop or just want to cut costs, living in a commercial property can look like a pretty attractive proposition.
But is it legal? Is it safe? Could it end up costing you? We’ll run you through the basics here.
How real estate zoning works
If a live/work property is really your goal, it helps to understand what could be standing in your way. Most of the time, that means understanding your local zoning laws.
Zoning in some form or other has been around for hundreds of years. In most towns, zoning simply means dividing up land into sections and earmarking it for a certain kind of development. This helps communities maintain property values, ensure safety, and keep traffic in check.
The most common zoning types include:
But even then, these designations can be broken down further. There are several different kinds of residential zoning, covering single-family homes, apartments, trailer parks, and so on, and they can’t always be intermingled. Each type has limits on what the property can be used for—you probably won’t be allowed to start a dairy farm in your backyard, for example.
Buying commercial property…and then living in it
It’s tough to give specific advice on what you need to do to live in a property not zoned for residential use, given that the rules vary so greatly from state to state, and even from town to town. Some areas do have plenty of mixed-use zones where you’ll have no problem finding what you’re looking for. In others, though, you will have to apply for a mixed-use permit, first.
One important thing for buyers to keep in mind? Just because you see a commercial listing that advertises an included apartment or living space doesn’t mean that space is legal. Before you buy, check with the local planning office to make sure all permits are in place.
Renting commercial property…and then living in it
For those of you playing with the idea of living in rented commercial space, expect to run into different hurdles. Even if you live in an area that has fairly relaxed zoning laws, odds are pretty good that your landlord will have their own rules, which you will agree to in signing the lease. All in all, that makes sneakily living in your rented office or studio space not a great idea.
There are plenty of tales on the internet of people who have worked around the law and made it work, though. In some instances, their neighbors were happy to keep quiet in exchange for the free after-hours security.
What happens if you get caught?
Alright, so you ignored all our advice and went about this the less-than legal way. What happens if the wrong people find out?
Well, again, this depends a lot on where you live and what your specific situation is. Your best bet will be to talk to a legal professional or real estate expert, but in general terms, this is what you can expect.
If you’re caught with an illegal apartment in a commercial property you own, you will in all likelihood be fined and either be required to remove the unit or legalize it by getting the correct permits. In the event that there’s a fire, flood, other dangerous situation, though, you can expect your insurance company to refuse coverage, and a death in one of those situations could lead to civil or criminal charges.
If you’re caught living in a rented commercial property, you will either be warned or evicted, depending on your landlord.
How to find live/work properties
Now that you’ve checked out your local zoning laws (right?), it’s time to start looking for the right place.
There isn’t exactly a box you can check on Zillow for commercial/residential properties, and you probably won’t find that option on your local MLS, either. If you know the area you’d like to live in, you can kick the process off by driving around and looking for signs. Vacant commercial property is usually well-advertised, with plenty of signage and prominent contact information. Pay special attention to older areas of town—they’re more likely to be zoned for mixed use.
Ultimately, though, your best bet is going to be getting in touch with a realtor or broker who knows the local market well. Many specialize in either residential or commercial properties, but some do work with both. Happy hunting.
Filed Under: Borrower Tips, Homeowner Tips, Personal Finance
Tagged with: can you live in a commercial property, live in a commercial property, living in commercial property, living in commercial property legally, mixed use property