What do grandfather clauses allow for?
Properties may allow properties to maintain their current use or structure even when the law changes. This also protects those property owners from fines or the costs of needing to make the property compliant. Owners need to be able to show the property’s history if rights are at issue. For example, owners must be able to show the property existed or operated prior to the new legislation. To know if grandfathered rights apply, owners and/or their attorneys should look to California Planning and Zoning Law (Government Code Title 7, Division 1, Chapter 4.) If the property raises environment impact concerns, like if a project for construction or expansion is proposed, they will look to the California Environmental Quality Act. (Public Resources Code, Division 13, Section 21000 et seq.)
Local statutes will often allow for a nonconforming use of land to be continued and maintained indefinitely. (Hotel & Motel Ass’n of Oakland v. City of Oakland (9th Cir. 2003) 344 F.3d 959, 968.) The rights to that use will run with the land which means the right to use the land in that nonconforming way are preserved even as the land changes hands. Just because grandfather rights are afforded to property owners does not exempt them from all rules. For example, a liquor store holding grandfather rights was still held to nuisance and criminal laws. (City of Oakland v. Superior Court (1996) 45 Cal.App.4th 740, 757.)
In order for grandfathered rights to follow the land the property must be consistently used for the purpose it is protected for. For example, a bed and breakfast was operated and then sold to another family. (Friends of Spring Street v. Nevada City (2019) 33 Cal.App.5th 1092, 1097–1098.) The new family stopped operating the bed and breakfast for around ten years and then sought to recommence its operation as a bed and breakfast. Because of this pause in use the property was no longer covered under the grandfathered rights allowing the property to be operated as a bed and breakfast. Its legal nonconforming use was terminated by discontinuing use with the intent to abandon that use.
What about associated licenses or certificates attached to property?
Licenses or certificates may run with the property. This is important because even if grandfather rights allow for a property to continue to be used for a nonconforming use, a license may still be required. To make sure licenses or certificates run with the property, they must be transferred properly. If a license or certificate is transferred properly it can also help bolster or ensure the owner keeps their grandfathered rights. For example, a business tax registration certificate running with the property may allow it to be converted to an otherwise impermissible use (or continue to be used for that use). (Holistic Supplements, L.L.C. v. Stark (2021) 61 Cal.App.5th 530, 552.) Transferring the business tax registration certificate allowed the dispensary to operate even when other non-grandfathered dispensaries could not. (Id. at 553.) Ensuring certificates and licenses are transferred properly enables the holder to avoid delays, burden, and expenses, or simply allow the business to exist. Local taxes may also follow a grandfathered methodology in how the state or county applies taxes to businesses and property owners. (AB Cellular LA, LLC v. City of Los Angeles (2007) 150 Cal.App.4th 747, 763–764.)
What about things tangentially related to real estate?
Grandfathered rights also apply to things tangentially related to property. For example, where a new ordinance prohibited billboards and outdoor advertising signs in an area of the city, grandfathered billboards could be relocated with a relocation agreement between the city and the billboard or property owner. (City of Corona v. AMG Outdoor Advertising, Inc. (2016) 244 Cal.App.4th 291, 295–296, [as modified (Jan. 26, 2016)].) In order to be eligible as a grandfathered billboard, an existing billboard needed to be traceable to a billboard erected in the City before the ordinance went into effect. (Id. at 297.)
What are some examples?
For example, Julie owns a business that operates in a residential area. She has owned it for thirty years and zoning laws have changed. When she first opened the business, she could engage in commercial activities (operating a business) in that area. Now, current zoning laws prohibit commercial activity in the neighborhood. Because she began operating her business before the law changed, she can continue its operations. If Julie stopped running her business for a few years because she thought she was going to retire, she may lose her grandfathered rights to operate that business.
Alternatively, Shawn has an office building that is fifteen stories tall in an area that limits office buildings to ten stories. However, the building was constructed before the restriction on height was imposed. So, the property can exist as it stands. If Shawn was attempting to build a new office building that was fifteen stories tall, he would not be able to under these current restrictions. Shawn would need to make sure his business license and any other necessary certificates were current. If he received the property from someone else and let them lapse, he might run into issues with making sure the business was exempt under grandfather clauses.
Conclusion
Grandfathered clauses of laws and regulations in real estate allows properties, and thus their owners, to be exempt from current zoning laws and regulations. These rights usually run with the land but if ownership is unclear or use of the property has changed over time those circumstances may prevent exemption under grandfather clauses. The Underwood Law Firm has a team of experienced lawyers who can help resolve your property interest disputes at trial and help you pursue solutions like partition actions. We are here to help.