Zoned R1 but has 3 separate Units - Lender refusing to lend

[Cole Hopkins]

Hi All,

I am looking for any advice, thoughts or someone to just tell me I need to move on. 

I placed an offer that was accepted on a good size plot of land that connects 2 different streets and has 3 separate units on it in Charleston, SC. About a month or so into the process (yesterday) I receive a call from the lender that the appraisal came back and due to the fact that the property is zoned R-1 and contains 3 units on it they cannot proceed. The lender believes the only way the seller will be able to sell his property is an all cash transaction. 

The real bummer is that I have already spent $1,000 on an appraisal and repair estimate and wish this came up sooner before investing any money into it. 

My questions are:

1) If it is zoned R-1, how are there 3 units on the property, year built listed is 1939, all with their own electric meter? (there is 1 water meter for the property) Is it possible it is zoned wrong?

2) Are there alternative lending options outside of a typical conventional residential mortgage loan that I should consider?

3) Is there anything I can do to make this purchase happen that I am not considering? 

I appreciate any feedback on this.

Thank you!

[Seth Borman]

I wouldn't bother with rezoning. You need to establish that the property was conforming when it was built and has been in use ever since. The city may issue you a letter indicating that it is a "legal nonconforming" property. You'll still have picky lenders but it will be possible to get a loan.

If it isn't legal then you are out of luck unless you alter the property or the zoning.