Municipal back taxes and code violations can significantly affect the acquisition, development, and resale potential of industrial land. These obligations are typically tied to the land title and must be resolved—either by the seller or the new buyer—before clear transfer or approval for construction. Below are five common types of municipal or regulatory issues that may accompany such assets:
1. Property Tax Arrears
- Unpaid property taxes accumulated over several years.
- Includes penalties, interest, and legal fees imposed by the municipality.
- May result in a lien, making the land legally unsellable until cleared.
- Can trigger auctions or confiscation under local revenue laws.
- Must be verified through the local tax authority’s records or a demand notice.
2. Land Use and Zoning Violations
- Use of land contrary to approved zoning regulations (e.g., industrial use on residential-zoned land).
- Unauthorized change of land use (CLU) without municipal approval.
- Violations of the local development control regulations or master plan.
- May require a formal conversion process or penalties before proceeding.
- Impacts compliance and could lead to stop-work notices during development.
3. Building Code Infractions
- Unauthorized or unsafe structures are built on the land without permits.
- Absence of sanctioned layout plans or building approvals.
- Violations such as excessive height, FAR (floor area ratio) misuse, or setback deviations.
- Municipal authorities may issue demolition orders or penalty demands.
- Title transfer and loan approvals are blocked until violations are regularized.
4. Utility Dues and Service Penalties
- Outstanding charges on electricity, water, or sewage connections.
- Illegal connections or tampered meters result in disconnection and fines.
- Municipal service fees (e.g., garbage, fire safety) are unpaid over time.
- Charges are often transferred to new owners if unresolved at the time of sale.
- Must be cleared to obtain new connections or NOCs for utilities.
5. Environmental and Fire Safety Non-Compliance
- Non-adherence to fire safety, pollution control, or waste management rules.
- May include missing fire exits, water sprinklers, or unauthorized discharges.
- Notices or penalties issued by municipal fire or pollution control departments.
- Affects industrial licensing and operational approval for future use.
- Often requires site audits and certifications before redevelopment.
