P11-Zoning, Land Use and Governmental Regulation

                        

Objective Form

11.1  Buyer shall, forthwith, examine and investigate to its
satisfaction, the status of the zoning of the premises and the
existence, availability and requirements of such governmental or
quasi-governmental permits, licenses and approvals as may be
necessary for the Buyer's intended use of the premises as ________
________________________.

11.2  If, within ________ days of the date hereof, Buyer
determines that the zoning or the existing availability and
requirements of such permits, licenses or approvals will not
reasonably permit the use of the premises as _______________________
and Buyer delivers written notice thereof to Seller within such
period, this agreement shall terminate and all funds deposited or
paid by Buyer shall be returned to Buyer.  Buyer agrees that it
shall, in good faith, make such determination.



11.3  Seller agrees to fully cooperate in Buyer's investigation
and examination of the foregoing matters.

Comment
    In most sales of real estate, the Buyer generally knows,
prior to contract, whether the property is zoned so as to permit
it intended use.  Often, however, it is unknown whether the other
permits and approvals necessary for such use are available and
practical.  Where there is no question as to such availability or
where the Buyer is willing to complete the deal and, later, take
its chances in obtaining necessary zoning or permits, the issue
of governmental regulation is not dealt with in the agreement.
Where, however, there is uncertainty as to such regulation and
where the Buyer deems it necessary to be assured of such
availability, the parties may agree to one of the following
methods of handling the issue:
    (1)  The Seller must obtain zoning and permits prior to
         closing.
         (a)  Obtaining enumerated permits is a condition to
              closing.


         (b)  The Seller warrants that such zoning and permits
              are obtained as of closing.
    (2)  The Buyer must obtain zoning and permits prior to
         closing.
    (3)  Buyer has the right to investigate the availability of 
         necessary zoning and permits and may cancel if not 
         satisfied.

Objective Form
    The objective form takes the third approach--that the Buyer
has the right to assure itself of the availability of such zoning
and permits and may cancel for the lack of them.  This treatment
is very similiar to that found in the provision for Inspection of
the premises.  (Section P09).  As with Inspection provisions, the
Buyer may back out of the deal wherYe, in good faith, it is not
satisfied with the availability of zoning and permits.  The
Seller may wish to bind the Buyer to more specific standards of
reasonableness in determining whether it is satisfied with the
zoning or to the availability of specific zoning or permits.
(See, the alternatives discussed in Section P09 on inspection


provisions for other language as to reasonableness and specific
uses).  Often the Buyer is only granted total discretion where it
has paid for an option, the price of which is forfeited if the
option is not exercised for any reason, including the
unavailability of zoning or permits.

Alternatives
    Where the Seller may be better able to obtain necessary
zoning changes, or where the Buyer does not wish to publicly
disclose its identity prior to closing, the parties may agree
that Seller shall obtain such zoning.  The obtaining of such
zoning is usually found as a condition of closing.  Furthermore,
the Seller may warrant that the zoning in existence at closing is
sufficient for Buyer's purposes:
         "As a condition to closing, Seller shall have the pre-
         mises zoned as _______________________________________,
         Seller shall, at closing, provide evidence satis-
         factory to Buyer that the property is zoned _________.
         If, at closing, seller has not provided Buyer with such
         proof, then Buyer may cancel this agreement and all sums


         paid or deposited by Buyer shall be returned to it."
         "Seller shall warrant that, as of and after closing,
         the premises is zoned _________________."
    It is unusual to find Seller's obligation to obtain such
items (specifically, building, occupancy and use permits)     
extending beyond zoning, as it is difficult for the Seller to
obtain exactly what the Buyer requires for its operations.
Where, however, that is appropriate, the following language may
be found.
         "As a condition to closing, Seller shall obtain such
         zoning and all building, use, occupancy or other
         permits necessary for Buyer's use of the premises as
         ___________________.  Seller shall, at closing, provide...."
         "Seller shall warrant that, as of and after closing, 
         all such zoning, permits and approvals shall exist
         so as to allow Buyers intended use of the premises
         as ________________.
    Most commonly, however, the Buyer must obtain rezoning and,
particularly, permits:



         "Buyer shall, prior to closing, obtain at its own
         cost and expense, all zoning, variances, rezoning,
         permits or commitments from the appropriate govern-
         mental agencies necessary to enable Buyer to use 
         the premises as _________________.  If, prior to
         closing,  Buyer has not so obtained such items then
         Buyer may, upon written notice delivered to Seller,
         cancel this agreement and have returned to it all
         deposits and amounts thereafter paid."
    
         "Seller agrees to fully cooperate with Buyer in 
         obtaining such items including but not limited to
         executing documents, making personal appearances and
         testimony,  and Buyer agrees, in good faith,
         to pursue the obtaining of such items."
    The Buyer may be compelled to specifically designate the
permits necessary.





         "Buyer shall, prior to closing, obtain the following
         zoning and permits:
         (1)
         (2)
         (3)
         If, prior to closing,. . . . "