Zoning endorsements are commonly required by commercial customers in conjunction with the Owner's and/or Lender's policies. This endorsement gives the insured assurances regarding the uses permitted on the subject parcel of real estate under the applicable zoning ordinances. It protects the insured from loss which might occur in the instance a final court order would prohibit the use stated in the endorsement.
There are generally three types of zoning endorsements requested by customers: an ALTA Form 3.0 for Unimproved Land, and ALTA Form 3.1 for Improved Land and a modified ALTA Form 3.1 which addresses the number of parking spaces required under a particular classification. All of these endorsements set forth the Zoning Classification and the uses permitted under this classification. The use(s) are commonly "abbreviated" to state only the current or proposed use. Most zoning endorsements do not set forth all conceivable permitted uses. If it is the wish of the insured that all uses be set forth, that portion of the zoning ordinance which describes all uses under a certain classification will be either incorporated by reference or an exhibit (part of the Zoning Code) will be attached to the endorsement. The insured might also request assurance that there are adequate parking spaces under a certain zoning classification and might select the modified 3.1 endorsement.
Most local title companies do not have copies of all municipal zoning ordinances and maps within their regions. The buyer or borrower is requested to provide the title company with an ALTA survey (discussed in a previous title tip) and a Zoning Letter before coverage for zoning can be approved. The title company can provide contact information for the particular city or county zoning department to their customer. The Zoning Letter should be addressed to the title company and identify specifically the land covered, the zoning classification for the subject land, state all permitted uses under said zoning classification and whether the current or intended use is in conformity with the zoning ordinance in force or in conformity with a variance that might have been approved. If parking coverage is addressed, the letter should also state if there are adequate parking spaces on said property. This letter should be ordered at least 2 weeks prior to the closing date as there may be a wait to receive the required letter.
A note on costs: Some municipalities charge for zoning letters therefore a buyer may have to advance a fee to obtain this letter. Title companies will generally advance recording fees to their customers but they will not normally advance a fee to obtain a zoning letter. In addition, because this endorsement covers a special risk, title companies will charge an additional fee for providing this coverage. Most often this charge is paid for by the buyer, but the cost can be shifted by negotiation of the parties. It is suggested that the issue of who pays for special coverages should be addressed in the real estate contract.
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Bethany Bond, Marketing Representative, joined Benchmark Title in 2006 with six years of title insurance experience under her belt. Bethany first began in the title insurance industry as a disbursing agent for a title company in the St. Louis metro area. She quickly moved to processor, then closer, and managed an escrow office while closing residential and commercial transactions before moving into marketing. As Marketing Representative for Benchmark, Bethany is primarily responsible for marketing in the Counties of Madison, St. Clair and Monroe. Her favorite thing about her job is meeting new people and taking care of their needs. She describes herself as a customer service perfectionist and loves when a customer calls wanting a miracle to happen, and then making it happen. Bethany's recommendation to customers is to be informed consumers by getting your firgures ahead of time, requesting copies of documentation, etc. so that they can leave the closing table as smart real estate investors rather than confused buyers. Bethany lives in Belleville's historic district with her boyfriend and favorite loan officer, Jason Stanfield, and his 7 year old daughter, Alexis, along with 3 dogs, 1 cat, 1 guinea pig and a turtle. As Bethany is frequently out on the road visiting customers, the best way to reach her is on her cell phone at 618-791-0395. She can also be reached in our Glen Carbon office at 618-288-1695 or by email at email@example.com.
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