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Zoning is municipal land-use regulation, set out in a zoning bylaw under provincial planning legislation, that dictates what a specific property can legally be used for — residential, commercial, mixed-use, agricultural, and so on — along with rules like permitted density, setbacks, and building height.
Each municipality passes its own zoning bylaw under authority granted by the provincial planning statute, so rules vary block by block and city by city. Lenders and appraisers check that a property's actual use matches its zoning — a legal duplex versus an unauthorized secondary suite, or a home-based business exceeding what's zoned — and a legal non-conforming use, allowed to continue because it predates a zoning change but generally can't be rebuilt or expanded the same way, is treated differently from an outright violation.
Zoning issues surface most often on rural, mixed-use, multi-unit, and rooming-house properties, or wherever a borrower plans to rent out a basement suite. An appraisal or a real property report or survey can reveal a zoning mismatch that affects insurability, marketability, and in some cases a lender's willingness to fund at all, so flagging suspected non-conforming use early avoids a late-stage financing surprise.
Set by municipal bylaw under provincial law: each municipality passes its own zoning bylaw under authority granted by the provincial planning statute, so rules vary block by block and city by city.
Legal non-conforming use is a distinct category: a use that was legal when established but no longer complies with a rezoned area can often continue, but usually cannot be rebuilt or expanded on the same basis if the building is destroyed or altered significantly.
Checked through appraisal and property reports: appraisers and, in some provinces, a real property report or survey certificate can flag a mismatch between a property's zoning and its actual use before a lender funds.
Can affect insurability and value: a confirmed zoning violation, such as an unauthorized suite, can affect a lender's or insurer's willingness to finance the property and can reduce its resale value.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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