Horizontal Property Regimes 101: Everything You Need to Know

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By Rochford Law Posted on June 15, 2020 at 7:00 AM
 

All real estate is not created equal. There are numerous types of real estate that can be used for varying purposes. The zoning of your property dictates what you can and cannot do with it.

Horizontal property regimes (HPRs) are an increasingly popular classification of property. There are numerous examples that can be seen by simply driving through your local Nashville neighborhood. The most striking and easily-spotted examples are lots that hold two new homes where there was previously a singular home.

So what exactly are horizontal property regimes? And what are the benefits of them?

HPR Defined

Horizontal property regimes are defined through a Tennessee statute which refers to properties with multiple owners. Multiple ownership can play itself out in many different ways. Consider, for example, condo buildings. There are multiple areas of the condo building that are owned by different people. However, there are also common areas that are considered to have shared ownership.

This statute dates back to 1963. The original situations the statute addressed have largely changed over time. The idea of a horizontal property regime encompasses much more than it did back then. Nashville’s most popular version of HPRs are commonly referred to as “tall and skinnies” because of the unique construction of two homes built in the footprint of a singular previous home.

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Benefits

The main benefit for contractors and developers is that HPRs avoid a lot of the red tape that comes with developing an area. Typically, there are reviews and approvals from the Metro Planning Commission. Requiring the approval from various agencies. There are also public hearings that can hold up development. HPRs, however, only need a property to be previously zoned for a two-family structure (such as a duplex). The developer will be issued a building permit and will be required to file a master deed to create the HPR. This process is much quicker.

HPRs also benefit home buyers in that they create more housing in areas that might otherwise seem to be full. And in a popular and growing market such as Nashville, there is always a need for more housing.

Disadvantages

The original statute didn’t take these smaller HPRs into account. Common space in a condo building with 40 units makes a lot more sense than a property with two structures. However, some of the requirements from the original statute still apply.

Questions of lot ownership can also become tricky for the eventual homeowners on a shared lot. The question of who owns the dirt underneath the house can have major implications for tax liability and insurance. And these considerations can become tricky to understand.

Challenges

Logistics can be difficult when constructing an HPR such as the placement of utilities. The constricted property lines also occasionally lead to encroachment by one party or another. Conflict resolution can be difficult in these situations because there are only two parties involved. A condo building might have infrastructure to deal with an issue, but a property with two buildings doesn’t have anyone to turn to.

These challenges can often be settled with open lines of communication and trusted legal advice.

Effects on the Neighborhood

The various neighborhoods that have seen an influx of “tall and skinnies” have had mixed reactions. Many of the homes chosen for the site of a future HPR are older homes that might not have been well-maintained. Neighbors appreciate the update to a previous eye sore. They may also see a rise in their property value as these properties are updated. Of course, this can be accompanied by a raise in property taxes as well.

The tendency to build more of these properties has shown great benefits for the city in increased tax revenue. This provides more capabilities to help the neighborhood from an institutional level.

Forecasted Nashville Trends

The continued tendency for Nashville to attract new residents will continue to create a need for more housing. There is a finite amount of available properties in the Nashville area. Increasing the number of homes on these properties is a great way to accommodate the new residents that move into the area every day.

Services of a Real Estate Attorney

A real estate attorney can help along the development of a horizontal property regime in a few different ways. First of all, the master deed that needs to be filed in order to create an HPR must be reviewed and approved by an attorney before it is recorded.

A real estate attorney can help with any challenging scenarios that come up throughout the process of developing land. What do you do if you are contracted to purchase a property that ends up being too small for your plans? How do you work through zoning issues? Renegotiated contracts or terminating them altogether can occasionally be necessary, and a real estate attorney is going to be necessary to do this correctly.


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Topics: Commercial Real Estate, Horizontal Property Regime, HPR, Nashville Real Estate Attorney, Real Estate Attorney