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Court relies on lease terms in legal non-conforming land use case

On Behalf of | Dec 16, 2022 | Commercial Landlord Tenant Law, Municipal & Public Agency Law |

Owners of commercial property pay a high price for the benefits they derive. The cost requires continuous compliance with land-use requirements. While granted, exemptions to use of land requirements involve complex issues. The Maricopa County website provides a detailed overview for issues related to nonconforming land use.

Nonconforming land refers to a use that does not comply with current regulations. Authorities permit legal non-conforming use based on two factors: the zoning district and ongoing use. Those seeking an exemption must submit an application for a determination by the Maricopa Planning and Development Department.

Property occupation is separate from ownership of business

A recent case in the Arizona Court of Appeals highlights how nonconforming use of land represents an often-overlooked and complicated aspect of property law. An owner purchased property to open an adult-entertainment club in 1994 and transferred the property to a Trust in 2011.

An amendment to the Phoenix zoning ordinances in 2012 made the club a legal non-conforming use. In 2015, Phoenix police seized the club for operating without either a cabaret or liquor license. Under the Phoenix City Code, a legal non-conforming use lapsed, so the Trust signed a lease with an entity to continue operating an adult-entertainment club on the property in 2016. The club had remained closed during this time.

The entity filed multiple unsuccessful appeals. Subsequently, the trust succeeded in terminating the entity’s right to possess the property. On appeal, the entity argued that, under the terms of the lease, the trust had implied that the club could be legally operated when the entity took possession.

The court reviewed two relevant provisions of the lease against the intent of the parties and the lease in its entirety. Both paragraphs imply terms that conflicted with the express provisions. Ultimately, the court determined that occupation of a property does not equate with operation of a business and ruled in favor of the Trust.

Knowledge and experience

Commercial land ownership often involves relationships with multiple parties. Businesses that occupy the land may have interests that require legal approval for nonconforming use. An attorney who understands the long-term consequences of these relationships can offer guidance.