You have found the perfect building for your client to own or occupy. Your client’s business depends on large trucks to carry materials to and from its site.
You are feeling quite pleased because the building you found to purchase or lease includes a truck dock and a large overhead door. Better yet, the current and prior businesses operating from the site have depended on large truck transportation.
You obtained a letter of compliance from the local zoning and planning department and expect that upon the closing of the purchase or lease of the building, your client will lavish you with thanks and perhaps add your name to the client’s holiday gift list.
Not so fast. Did you determine whether the property is located on, or requires the use of, roads or streets that are subject to potentially impactful roadway restrictions such as weight/axle or seasonal road use limitations or whether the property lacks proximity to designated truck routes?
Remember that a prior use similar to your client’s intended use may simply represent a case of non-enforcement — and do not assume that building features such as loading docks and overhead doors mean that your client’s intended use is “grandfathered.”
How do you find out whether your client’s proposed dream building would be negatively impacted by road restrictions?
Signs may be posted on restricted roadways. However, the best way, according to Thomas J. Byle, P.E., assistant director of engineering with the Kent County Road Commission, is to add another information source to your due diligence checklist.
“In order to determine if there are any seasonal or permanent restrictions on a roadway, contact the ‘local road professionals, the County Road Commission.’ They typically have the most miles of roads in a county. The Road Commission can refer you to the appropriate agency if the road you are interested in is a state highway or is in a city or village,” Byle said.
He added, “All weather or all season roads in the past were called Class ‘A’ roads. Spring weight restricted roads were called Class ‘B’ roads. That nomenclature may still be used occasionally.”
Commercial Alliance of Realtors affiliate members confirm that common “due diligence tools” such as detailed surveys and title insurance are not designed to reveal, and protect the prospective purchaser or tenant from, the potentially adverse consequences of road restrictions.
Rod Unema, P.S., survey department manager of Exxel Engineering Inc., confirmed that “the ALTA/ACSM survey standards, while a coveted and popular type of survey for commercial properties, does not include automatic verification as to road/street use and limitations.”
He added, “The client can ask to have this matter added to the ALTA/ACSM survey,” but the client has to be made aware of the potential issue in order to make such a request.
Tom Host, vice president of commercial operations with Transnation Title Agency of Michigan, stated, “Title insurance policies, including any additional endorsements such as the ALTA 17-06 Access and Entry Endorsement, are not designed to insure or provide coverage for matters of county, MDOT, city, or village seasonal, road limit or other use limitations.”
Michigan statutes and administrative rules provide for the creation of seasonal and weight-restricted roads. Many counties have adopted procedures governing use of seasonal roads in the “off season” (commonly November or December through April). Most of those procedures require the proposed user to obtain a permit to use the road and to post some sort of security, often a bond or irrevocable letter of credit, which may be used to repair the roads if they are damaged by the permit holder.
A real estate attorney or other real estate professional should be consulted for additional information.
Fred Otterbein (Liberty Realty Corp.) and Mark Hanish (Law Weathers) are affiliate members of the Commercial Alliance of Realtors West Michigan.