Historic Homes and Historic Districts – Is this your area of expertise?
July 2, 2021
By: Kara Nicholls
There are many unique aspects to buying and selling registered historic homes or any building that is in a historic district. Not understanding the nuances and legal implications of such a transaction may impact your client if you are not acting within your area of expertise or seeking the advice of an expert. ARS R4-28-1101 (H) requires that the service provided to a client conform to the standards of practices. This includes providing professional services concerning “a type of property or service that is outside the salesperson’s or broker’s field of competence… “. Further, SPS No. 2005.13 states that “Reasonable care or competence may include recommending that a client seek professional or technical advice when the matter is beyond the expertise of the agent. Licensees are expected to take reasonable steps to assist their clients in confirming or verifying information.”
What makes a district or a home “Historic” and what does this mean? Districts and building can be registered as “Historic” by the National, Arizona, or local registry. While the national and state registrations may be of significance in the valuation of the property, these registrations do not limit the use, improvement, or destruction of the building. However, the property may be governed by a local zoning overlay. These zoning overlays require improvements (usually limited to exterior appearances), require compliance with specific standards, and may prevent the demolition of the property. Properties that are either under consideration or located within a district under consideration may also be affected by overlays. Existing preservation or conservation easements may further restrict the improvement and use of the property in perpetuity.
Other things to consider when dealing with historic homes that your client(s) might need to know:
- Not all contractors are created equal. Engaging a contractor that has knowledge of or specializes in historic homes can not only help retain the property’s value but can ensure that the property owner avoids costly mistakes.
- Upkeep may not be cheap. Old houses may come with large repair prices tags, especially when restricted to certain building materials. A property usually needs to be over 50 years old to be considered historic.
- The Buyer’s modern dream interior may not be financially feasible.
- Tax incentives may apply. There are not only federal tax incentives, but the state of Arizona offers a substantial reduction in the state property tax assessment for eligible owners. Certain conditions apply to maintain the reduced assessment and sales must be reported.
As with any real estate transaction, it is a requirement of your license to act with reasonable skill and care by working in your area expertise or disclose you do not have the expertise the transaction requires. If you are considering expanding your business into these areas and would like to learn more about historic homes: Contact your local board to ask if there are any broker tours in historic areas or groups dedicated to historic homes and join them; investigate resources from the National Parks Service, the Arizona State Historic Preservation Office, and local government; attend conferences dedicated to historic preservation along with state and local committee meetings and historic neighborhood meetings; reach out to owners of historically registered or zoned properties and ask them about their personal historic experiences. Many owners will be happy to share the story about their home and their experience dealing with the local governments and neighbor associations.
If you have questions as to whether a transaction is in your area or your Broker’s area of expertise, please reach out to your Broker before proceeding.