The building has been used as a retail bakery for twelve years. You are buying it to open a café and small retail operation. Same general category — food service, retail. Should be fine.
Maybe. What if the property’s food service use was grandfathered under a prior zoning designation that was changed years ago? What if your concept — with indoor seating, a commercial kitchen, and late hours — triggers a different use category than “retail bakery”? What if the parking lot has 20 spaces and a café with your seating capacity requires 32?
These are not permit questions. They are due diligence questions. The permit office will tell you the answers, but only after you’ve already signed a purchase agreement and committed earnest money.
What Zoning Actually Controls
Zoning is a municipal classification that determines what activities are permitted on a parcel and how land and structures may be used and improved. Most people understand the broad categories — commercial, industrial, residential. What they often miss is the detail inside those categories.
Use requirements determine not just the broad category but the specific permitted use. Permitted use tables in zoning ordinances are detailed. Restaurant is not the same as retail. Medical office is not the same as professional office. Drive-through window is sometimes a conditional use or special exception, not a by-right use. A property zoned commercial does not mean any commercial use is permitted — you need to confirm that your specific intended use is on the permitted or conditional use list for that zoning district.
Dimensional requirements set minimum setbacks, maximum building height, lot coverage limits, and minimum lot size. These determine what can be built and whether existing improvements comply. A property with a nonconforming setback — a building that was built closer to the property line than current code allows — may not be expandable without a variance.
Parking requirements are set by use type and square footage and are recalculated when use changes. A change from a low-parking retail use to a high-parking restaurant use can create a parking deficiency that either kills the project or requires a variance before you can open.
Signage regulations control sign size, height, placement, and illumination. If your business depends on visible signage, verify what is permitted before assuming the existing sign is representative of what you’re allowed.
Nonconforming Uses: The Hidden Risk in Established Properties
A nonconforming use is one that was lawfully established under prior zoning regulations but is no longer permitted under current zoning. These uses are typically grandfathered — allowed to continue — but with significant restrictions, and the protection erodes over time.
In Indiana and most jurisdictions, a nonconforming use that is abandoned loses its protected status. “Abandonment” is typically defined in local ordinances as a period of non-use — often 12 to 24 months — during which the prior use was not actively conducted. If the prior tenant moved out 18 months ago and the property has sat vacant, the nonconforming use protection may already be gone.
This is where buyers get surprised. The prior use was permitted. The property was used that way for years. The obvious assumption is that you can do the same thing. But if abandonment occurred — even unintentionally, simply through vacancy — you may be starting from scratch under current zoning. Verify the nonconforming status and when the last active use occurred.
Nonconforming uses are also typically restricted from expansion. You can usually continue the existing use, but you may not be able to add square footage, significantly renovate, or intensify the use without losing the protected status and triggering full compliance with current zoning.
Change of Use and When It Triggers a Review
A change of use — shifting from one permitted use category to another — typically requires a review of whether the proposed use is allowed in the zone. This is true even when moving between uses that feel similar. Switching from a general retail use to a bar with entertainment may involve different use categories, liquor licensing requirements, parking calculations, and building code occupancy classifications.
Change of use also frequently triggers a building code review, requiring compliance with current ADA accessibility standards, fire codes, occupancy load calculations, and energy efficiency requirements. The cost of bringing an older building into compliance for a new use can be substantial. Budget for it before you budget for buildout.
Local zoning ordinances vary by municipality. Each county could have several different ordinances, with the one affecting your property dependent on which county, city or town has jurisdiction. Verify zoning under the specific local ordinance that governs the property — not a general assumption about the city or county. An address that lists a specific city does not control which ordinance applies.
The Indiana Variance and Special Exception Process
If your intended use is not permitted by right in the applicable zoning district but might be permitted with approval, you are looking at either a variance or a special exception before the local Board of Zoning Appeals. In Indiana, BZA procedures are governed under IC 36-7-4.
A use variance is the harder road. To obtain a use variance in Indiana, the petitioner must demonstrate that strict application of the zoning ordinance creates an unnecessary hardship that is specific to the property — not merely inconvenient or economically undesirable for the owner. The hardship must be tied to the property’s physical characteristics, not to the business plan.
A development standards variance — relief from dimensional requirements like setback, height, or parking count — has a lower threshold, requiring only that the variance will not substantially harm the public interest and that the property has special conditions justifying the relief.
BZA hearings in Indiana require public notice, neighbor notification, and an opportunity for objection. The process from application to hearing typically takes 60 to 90 days, and the BZA may impose conditions on approval. This timeline is fundamentally incompatible with most deal closings unless zoning was identified early and the purchase agreement was structured to accommodate it.
What Your Purchase Agreement Should Say About Zoning
At minimum, the seller should represent in the purchase agreement that the current use of the property is a lawful, conforming use under applicable zoning ordinances. This representation creates a basis for the buyer to terminate or seek damages if the representation is false.
For buyers intending a use different from the current use, a specific zoning contingency is the right protection. The contingency should define the intended use, specify what approvals are required, and give the buyer a termination right if approvals are not obtained within a defined period. The contingency should also address who bears the cost of the variance application and who controls the process.
For development deals where rezoning or a BZA approval is part of the business plan, the purchase agreement should include a seller cooperation covenant — seller agrees to sign applications, cooperate with municipal review, and not take actions that impair the approval process during the contract period. Without this, you may find a seller who becomes uncooperative after they have a signed contract and know you’re committed.
In all cases, don’t leave zoning to the permit application. Verify it during due diligence, when you still have leverage.
Bottom Line
Zoning is not a permit department problem. It is a deal-stage problem. The time to discover a zoning issue is during due diligence, when you can exit cleanly, reprice, or restructure the transaction. The time not to discover it is after closing, when your options are expensive and the leverage is gone.
Before you sign: verify the current use classification, confirm it is a conforming use, understand what your intended use requires, and check whether any recent vacancy triggered nonconforming use abandonment. If your deal depends on zoning approval you don’t yet have, put the right contingency in the contract — and the right timeline.
Mike Lang is a transactional lawyer who writes weekly for commercial real estate investors and owner-operators navigating the deals that define their portfolios. Questions or topics you want covered? Email Mike.