Overlay zoning

Many communities that have adopted zoning laws governing the uses that are allowed in the various zones have also adopted overlay zones that control the same property. Overlay zones are just that — they add another layer of regulation to those that control the underlying zone.   Overlay zones are intended to add additional protection the underlying area. The most common types of overlay zones are intended to protect historic areas, neighborhoods or buildings with unique characteristics or environmentally sensitive areas.

Overlay zones can be a trap for the unwary and can add significant time and cost to projects, especially if an owner or his contractor is unaware that the property is subject to overlay regulations in addition to the underlying zoning requirements. For example, if the owner calls the zoning enforcement officer in advance to find out what permits are required to replace a fence or a structure in a residential zone, the response is likely to omit information about the additional requirements in an overlay zone unless the specific question is asked. Based on the incomplete information from the phone call, the owner may have placed a special order for a fence, or paid for a particular architectural design, only to discover that the type of fence or the special design is not permitted in the overlay zone. The best way to avoid this situation is to either provide the building inspection office the exact address of the property and ask the staff if it is governed by an overlay zone in addition to the underlying zone. Alternatively, property owners should hire experienced design or legal professionals who can verify the governing zoning regulations before ordering materials or plans for a specific project that are incompatible with the overlay zone requirements.

House Exterior. Entrance Porch And Front Yard View

However, in the example above, if the fence is already ordered or the owner wants a particular design, it may still be possible to obtain approval for it. Land    use procedures for underlying zones go to boards of adjustment or planning commissions, but approvals and appeals for overlay zone generally to boards that have been created to handle these matters. These boards apply specially adopted guideline and standards to determine if the improvement meets the requirements of the overlay zone. Decisions are made in a public hearing and letters are sent to neighboring property owners informing them of the topic to be discussed. A favorable outcome is more likely to occur if surrounding owners do not object, but even with objections, a reasonable good faith justification goes a long way in securing approval from the board.

If the board votes to disapprove the requested relief, at least one further appeal is generally built in to the governing regulations, either to a land use body, such as the planning commission or directly to court. While appeals to a different land use body have a good chance of success, it is difficult to obtain a court verdict reversing a board’s decision due to the standard of review courts apply to reviewing such matters. The time and cost of a court appeal is also substantial. Accordingly, doing homework at the planning stage of a contemplated improvement will save a lot of frustration, time, and expense in obtaining approval for work on properties in overlay zones.


Christine Neal Westover is an attorney in the Lexington office of McBrayer. Ms. Westover has extensive experience practicing law in both the public and the private sector. The focus of Ms. Westover’s experience and area of practice is land use law since her assignment in 1991 as legal advisor to the boards, commissions and divisions of government within Lexington Fayette County on all matters related to planning, zoning and land use law. Ms. Westover has an extremely deep and broad expertise of the laws governing land use in Kentucky and the procedural and substantive complexities that underpin planning and zoning matters. She also has significant experience dealing with governmental divisions such as Building Inspection, Code Enforcement and other administrative bodies due to their regulatory authority in land use matters. Ms. Westover can be reached at cwestover@mmlk.com or (859) 231-8780, ext. 137.


A Slippery Slope for Boat Slips

What happens when an existing condominium property regime is found to be invalid? Well, the Louisville Yacht Club recently encountered that exact problem. The case, Steenrod v. Louisville Yacht Club Ass’n, Inc.,[1] is one which Kentucky boat owners and condominium association members should be familiar so as to avoid similar problems.

In 1984, a “Master Deed, Declaration of Condominium, Horizontal Property Regime of Louisville Yacht Club” (Master Deed) was executed and filed of record by its developer, Louisville Yacht Club, LTD. The Club consists of a boat marina and ancillary property located on Pond Creek on the Ohio River in Oldham County. Pursuant to the Master Deed, 158 individual “Boat Slip Units” were created as part of the marina and were defined as “a part of the condominium property which is subject to private ownership.”

Kentucky has a specific set of requirements, known as the Horizontal Property Law, for the creation and establishment of a condominium property regime. To be valid, a proposed regime must comply with various statutory mandates; specifically, every condominium property must consist of two types of real property: (1) property owned in common by all owners (defined as the common elements) and, (2) property owned exclusively by one owner (defined as a Unit). Thus, purchasers of condominium units receive a fee simple title to a Unit and an undivided interest in the common elements. At the Louisville Yacht Club, purchasers received a Boat Slip Unit, held in fee simple, with an undivided share in the common elements such as the dock and clubhouse.

A dispute arose between the Louisville Yacht Club Association and a Boat Slip Unit owner, Ralston Steenrod, after the association began imposing fees for dredging operations along the marina. Ralston argued that the association had no authority to assess any type of fees because the Yacht Club was not a valid condominium property regime. Litigation ensued.

According to the Kentucky Court of Appeals, the Boat Slip Units were, in fact, not Units within the definition of the applicable statute, KRS 381.810(1) and, therefore, could not be considered part of the condominium property regime under the Horizontal Property Law.

KRS 381.810(1) defines a “Unit” as:

An enclosed space as measured from interior unfinished surfaces consisting of one or more rooms occupying all or part of a floor in a building of one or more floors or stories regardless of whether it be designed for residence, for office, for the operation of any industry or business, for any type of independent use or any combination of the above uses, provided it has a direct exit to a thoroughfare or to give common space leading to a thoroughfare.

(emphasis added). Based upon the plain language of the statute, the Court of Appeals concluded that a boat slip does not qualify as a Unit – it does not consist of an enclosed space nor does it have rooms.

In 2011, the Kentucky Condominium Act (KRS 381.9101-KRS 381.9207) became a supplement to the Horizontal Property Law. Under the supplement, boat slips can be construed as a condominium unit. The Kentucky Condominium Act, however, applies retroactively to condominiums created before its effective date “only to the extent of events or circumstances occurring after January 1, 2011.” In the Steenrod case, the events and circumstances that led to the filing of suit occurred prior to January 1, 2011, so the supplemental law is inapplicable.

The ramifications of Steenrod are murky, at best. Because the Master Deed and Plat used to create the condominium property regime were rendered invalid, just what interest the Boat Slip Unit owners now possess is unclear…further litigation or action from the Kentucky Legislature may be necessary to make this determination. According to Judge Maze in his Concurrence of the decision, “the potential effects of this decision will likely produce chaos for the entire membership of the Louisville Yacht Club Association and possibly other similar organizations…[w]hile the law is clear on this point, the result leaves the status of the Yacht Club and similarly situated clubs in a great deal of uncertainty.” It is clear that the Louisville Yacht Club Association no longer has the authority or power they once thought they did and, as Judge Maze points out, they “may also have to be re-organized under the new Kentucky Condominium Act if that is possible.”

Boat slip owners may very well find themselves in unchartered waters when the time arrives to sell or transfer their unit if it is organized as part of a condominium regime. If you are such an owner, or a member of an Association similar to that of the Louisville Yacht Club, and would like to discuss your ownership rights, contact a McBrayer real estate attorney today.

[1] Steenrod v. Louisville Yacht Club Ass’n, Inc., 417 S.W.3d 234 (Ky. App. 2013).


Christopher A. Richardson is an associate at McBrayer, McGinnis, Leslie & Kirkland, PLLC in the Louisville, KY office. Mr. Richardson concentrates primarily in real estate, where he is experienced in residential and commercial closing transactions, landlord/tenant relations, and mortgage lien enforcement/foreclosure. Mr. Richardson has closed innumerable secondary market and portfolio residential real estate transactions and his commercial practice ranges from short-term collateralized financing and construction lending to development revolving lines of credit. He can be reached at 502-327-5400 or crichardson@mmlk.com.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

Mortgage Prequalification versus Preapproval

First time home-buyers are often under the impression that mortgage prequalification and preapproval are interchangeable terms, but they are actually two separate steps in the financial process and it is important to understand the difference between them.

Prequalification is a lender’s estimate of how much you could be eligible to borrow based on information you supply. In a prequalification, a credit report is not pulled, which means that the lender is depending on incomplete (and sometimes inaccurate) information. Prequalification does not mean a loan will be given, but is meant to serve only as an estimate for the mortgage process. Prequalifications help sellers determine a potential buyer’s general creditworthiness and give buyers a better understanding of their future financial responsibilities, but are not binding in any way.

Preapproval, however, is more concrete and does involve a credit report check. Lenders will contact employer, banks and others to verify a potential loan recipient’s income, assets, debts and credit history in this step. A preapproval from a lender will say how much you are eligible for, how long the approval is valid, and may contain some additional conditions for the loan. Note that a lender may not require the payment of any fees, except the cost of a credit report, at the time of a preapproval. Just because one obtains a preapproval does not mean that the loan is final – the funding will only be given when the property appraisal, title search, and other verifications have been confirmed.

There is no harm in getting prequalified, but to seal the deal preapproval is necessary. Buying a home is a complex process – make sure you know the industry lingo before getting involved in buying and selling negotiations to ensure that all parties are on the same page.

J. Markham

Joshua J. Markham is a member at McBrayer, McGinnis, Leslie & Kirkland, PLLC in the Lexington, KY office. Mr. Markham practices in virtually every aspect of real estate law, including title examination, title insurance, clearing title issues, deeds, settlement statements, preparation of loan documentation, contract negotiation and preparation, lease negotiation and preparation, and any and all other needs related to residential and commercial real estate matters.He can be reached at jmarkham@mmlk.com or (859) 231-8780, ext. 149.

This article is intended as a summary of federal and state law activities and does not constitute legal advice.