Can You Build a Home on a Commercial Lot?

Giovanni Valle is a licensed architect and LEED-accredited professional and is certified by the National Council of Architectural Registration Boards (NCARB). He is the author and managing editor of various digital publications, including BuilderSpace, Your Own Architect, and Interiors Place.

Building a home or residential unit on a commercial lot has the potential to be lucrative due to various factors, including the ability to build larger structures, potentially lower land costs, and the advantages of existing infrastructure and proximity to local amenities. But is it possible to do?

You can’t build a home on a commercial lot as of right due to zoning laws, restrictions, and other building requirements, but if your local laws allow it, you can convert the commercial property into a residential one. In many jurisdictions, this is permitted.

In this article, I’ll explore how you can convert a commercial property into a residential property and answer the main questions surrounding the process.

Can You Change Commercial Property to Residential?

You can change a commercial property to a residential one if local regulations permit it. This isn’t typically a problem, but it often requires a fair amount of steps to make it happen. Depending on the location, you may need to follow specific protocols or go through a hearing.

More often than not, people perform the opposite process of converting a residential property to a commercial property, which is often easier than changing it from commercial to residential. Nonetheless, the process can be done if you take the appropriate steps.

Before starting the process, you’ll need to examine your local zoning laws, which are a huge part of real estate. Essentially, they determine what you can and cannot do on any given property. If you’re in an area strictly zoned for commercial use, then no amount of work will ever convert the property to a residential one.

Some zoning laws outline properties that can only be used for specific activities.

For example, let’s say a property is zoned residential. In most cases, a residentially zoned property means that any permanent structure you place on the property must be at least 1,000 sq ft (92.9 sq m), which is part of the zoning restrictions for this type of property.

Other types of zoning have different restrictions, including commercial uses. For example, you can’t build a house on a commercial lot.

Changing Your Property From Commercial to Residential Zoning

Before changing the zoning standards, you’ll need to determine whether the community where your property is located allows you to have a residential property. Sometimes, the entire zoned area is commercial, and if that’s the case, you won’t be able to change the property’s zoning.

This is why you should understand your local zoning laws before starting the process.

Once you’ve done this, you’ll need to apply at the county courthouse or municipal building to change the zoning from commercial to residential. Depending on the zoning laws for your region, the request will be either approved or denied at the first application.

Your request should be approved if there are no conflicts of interest between you and the zoning planning committee. In these cases, legally changing your property from commercial to residential is as simple as putting in a request and waiting for everything to be processed.

Usually, this process will take two weeks and a month, but it can take longer if the municipal authorities feel your request needs more review. However, this isn’t always the case.

So, what happens when your first application is denied?

Why Your Rezoning Application May Have Been Denied

Before I discuss the additional steps you will want to consider, let’s examine why your initial application may have been denied.

Rezoning your property would harm the surrounding community. Having a home in the middle of a business district may adversely affect business activities.

Rezoning the property isn’t necessary. It might be a major inconvenience to rezone the property, and the local government may not feel like your desire to rezone overrules this.

The district only allows commercial zoning. There’s not a lot you can do at this point, even if you wanted to appeal it.

What You Can Do When Your Application Is Denied

If the district only allows commercial zoning, you can look at either building commercially or purchasing another residentially zoned property. Little can be done in these situations because it creates a large negative impact on the surrounding community for the governing boards to change things.

Talk with your neighbors, as the surrounding community’s opinions play an extremely vital role in the government’s willingness to rezone an area. It takes time to build rapport with them, but having a good network makes a huge difference in obtaining permission.

If you have a solid plan of what you want to do with your property, and you can show the municipality what you intend to do, your plan will likely be approved.

You can also partner with local businesses for them to lend their support in your rezoning pursuit. If your project benefits them or the community, use this to convince them. Having the support of local businesses makes a big difference.

After taking these steps, try reapplying for rezoning. In most cases, you’ll be approved the second time around, especially if you have the support of others in the local neighborhood.

If your appeal isn’t approved after reapplying, it could be that your changes would hurt rather than help the community. In some cases, there’s nothing that you can do about this, and you must move on with a different plot.

Final Thoughts

While you can’t expect to build a home on a commercial lot without consulting the authorities, getting the property rezoned is not difficult.

Remember that even with residential property, certain zoning laws determine what structures you can build, how large or small they need to be, and how utilities must be set up.

If you follow the right procedures to change your commercial property to a residential one, you can definitely build your dream home on a commercial lot and reap the benefits.