The Mortgage Instructions Toolkit provides practical guidance for lawyers responding to lender requests in residential real estate transactions. This page addresses zoning.  

The situation

Lenders may ask you to ensure or certify that the property complies with municipal zoning requirements.

There are two aspects to zoning:

1. Compliance with lot and building requirements, such as minimum and maximum lot size, minimum frontage, height, setbacks, yards, and alignments, and the location of buildings situated on the property; and
2. Compliance with zoning by-laws on the use of the property, such as commercial activities in a residential neighbourhood, or use as a group home, two family home or daycare. This necessarily entails a determination of the applicable zone and confirmation and review of any existing variance or use permit.

The first aspect is usually addressed by obtaining a zoning memorandum from the municipality. However, most municipalities will not issue a zoning memorandum without a current, original building location certificate/survey. A current survey may mean one that was completed within the last 12 months. Obtaining a current survey takes considerable time and can be quite costly.

The second aspect is usually achieved by a request to the municipal office requesting a letter stating that the existing use of the property is a permitted use pursuant to the applicable zoning use by-law.

Information about zoning may be difficult to get and may not be complete. Lawyers should not certify compliance with zoning requirements.

Sample lender instructions

Zoning

Where possible obtain a letter from the appropriate municipal officer stating the buildings comply with all applicable building or zoning requirements. A copy of this document is not required by the Mortgagee. If a title insurance policy is obtained a letter is not required. This letter need not be obtained for Protocol transactions.

Or

Except in jurisdictions where normal real estate practice does not include inquiry into building, zoning and set-back compliance for residential properties (British Columbia, Saskatchewan, and Nova Scotia), you will obtain a statement (“Compliance Statement”) from the appropriate municipal officer or other official (where available) stating that the Mortgaged Property and the buildings and improvements thereon comply with all applicable building, zoning, set-back and other requirements of any competent authority relating to the location or use of the Mortgaged Property and the buildings and improvements thereon. You will advise the Bank prior to the advance of any mortgage loan proceeds if you have reason to believe that the Mortgaged Property or the buildings or improvements situated thereon do not comply with applicable building, zoning, and set back or other location or use requirements of any competent authority.

We will accept a Title Insurance Policy in place of your obtaining a Compliance Statement. A Compliance Statement is not required for Protocol transactions.

Practice guidance

• Review the mortgage instructions to identify what the lender is requiring from you.

No Title insurance

• When there is a zoning memorandum or other correspondence from the municipality: give information from the memorandum without commenting on its accuracy. For example, the date of the memo, who signed it, and what it said.
• When there is no zoning memorandum:  describe the information you have and its source, for example a phone call with “x” municipal official on “y” date. Do not give an opinion on this information or certify that the property conforms to the zoning.

Title insurance

• Confirm coverage of the title insurance policy includes compliance with zoning law. Give only required information to the title insurer.

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