By Christina Dwight of Commercial Investment Strategies
It's not uncommon to encounter the term "nonconforming" when reviewing permits and zoning records in preparation for listing a Honolulu-based apartment building for sale. While the word itself can trigger alarm bells and concerns of limited marketability. In most cases, it simply means the apartment building was lawfully developed under earlier rules and no longer meets every standard in Honolulu's current zoning code.
In fact, nonconforming apartment buildings remain valuable income-producing properties and attract strong buyer interest. The key is understanding the nonconforming status, documenting how it was legally established, and addressing underlying issues before any of it becomes a surprise when buyers start their own due diligence.
Key Takeaways
- A nonconforming apartment building may have been legal when constructed but no longer complies with current zoning standards.
- Nonconforming does not mean the same thing as illegal, unpermitted, or unauthorized.
- Common Honolulu nonconformities involve unit counts, parking, setbacks, structures, uses, and lot dimensions.
- The designation may affect renovation, rebuilding, financing, appraisal, and redevelopment potential.
- Owners can still sell successfully when the property's status is researched, documented, and disclosed clearly.
What Nonconforming Means Under Honolulu Zoning
A property becomes nonconforming when a building, use, dwelling-unit count, parking arrangement, or lot was lawfully established at the time of construction, but no longer conforms to rules adopted later. Unlike an unpermitted condition that may never have been legal, the City and County of Honolulu's Land Use Ordinance allows many legally established nonconformities to continue, subject to restrictions.
- A building may sit closer to a property line than current setbacks permit.
- The property may contain more dwelling units than current density rules allow.
- The apartment building may provide fewer parking spaces than would be required for new construction.
Other examples can include a lot that is smaller or narrower than current minimums, a structure that exceeds today's lot coverage or height standards, or a use that was permitted when established but is no longer allowed in the same zoning district.
However, the takeaway here is that the existing building is legal. It simply doesn’t conform to the new zoning law requirements. Simply put, this means that if the building is destroyed or demolished, any new construction would have to conform to today’s zoning law. For example, if an existing apartment building was built legally but the zoning has changed to residential at some point, the redevelopment of the lot only allows a house to be rebuilt in its place.
Lenders still loan on legal, non-conforming property, and you can still get an insurance policy. Legal, non-conforming status is a fairly common occurrence in Hawaii, and it shouldn’t scare you away as long as you educate yourself about the history of property and its potential uses under the new zoning law.
Why Nonconforming Apartment Buildings Are Common in Honolulu
Many Honolulu apartment buildings were constructed during the housing boom of the 1950s through the 1970s. Developers worked with small urban lots, different parking expectations, and zoning standards that have since changed several times.
- Older walk-ups often have compact setbacks and high lot coverage.
- Some properties have unit counts that could not be recreated under current zoning.
- Buildings constructed at a time when car ownership needs differed may have limited parking.
Of course, as Honolulu grew, the city revised regulations governing apartment districts, density, yards, parking, building size, and permitted uses. The buildings remained in place, but the standards around them evolved. But new regulations haven't changed the fact that nonconforming apartment buildings remain valuable.
How Nonconforming Status Can Affect a Sale
A nonconforming designation becomes important during a sale because buyers, appraisers, lenders, and insurers want to know precisely what they are evaluating. As with any deal, uncertainty, regardless of the concern, can create more difficulty in closing a transaction than the nonconformity itself.
It's worth noting that Honolulu's rules on nonconformity include some nuance. For example, a nonconforming structure may generally be repaired or altered if the work does not increase the nonconformity. The current ordinance also contains separate reconstruction thresholds and provisions for nonconforming structures and nonconforming dwelling units. It's a major reason why every property deserves its own level of meticulous due diligence.
Research, Document, and Position the Property Before Listing
A nonconforming designation does not mean the building cannot sell successfully. The most useful step an owner can take is to investigate the apartment building's history before bringing it to market. Such a review may involve permits, approved plans, historic zoning maps, real property tax records, inspection notes, certificates of occupancy, and correspondence with the Department of Planning and Permitting.
- Compare the existing unit count and building configuration with permits and approved plans.
- Confirm whether additions, conversions, parking changes, and other alterations received the required approvals.
- Document the nonconformity clearly and market the property to buyers who understand older Honolulu apartment buildings.
Owners should not assume that separate utility meters, tax assessments, or decades of occupancy prove a unit is legal. Those records may support the property's history, but they do not always establish zoning or building-code compliance on their own.
FAQs
Is a nonconforming apartment building illegal?
No. A lawful nonconforming condition generally existed legally before current zoning requirements took effect. An illegal or unpermitted condition is different because it may never have received the approvals required when it was created.
Can I renovate a nonconforming apartment building?
Possibly. Honolulu's rules generally permit certain repairs and alterations when they do not increase the nonconformity, but the answer depends on the specific condition and proposed work. Owners should consult the Department of Planning and Permitting and qualified land-use professionals before beginning a major project.
Will buyers still purchase a nonconforming apartment building?
Absolutely. Many buyers are comfortable purchasing legally nonconforming apartment buildings, particularly when the property has strong income, a desirable location, and clear supporting records. Problems are more likely to arise when the status is uncertain, undocumented, or disclosed too late.
Explore More with Christina Dwight and Commercial Investment Strategies
A nonconforming designation does not have to prevent an owner from achieving a successful apartment building sale in Honolulu. In many cases, it reflects the history of an older building that was legally developed under standards different from those in effect today. The property may still offer valuable density, reliable income, and a location that would be difficult to reproduce through new construction. The strongest approach is to understand the classification before listing, assemble the records needed to support it, and explain the issue accurately to prospective buyers.
If you're considering the sale of a current apartment building, nonconforming or otherwise, and need help evaluating pricing, marketing, buyer outreach, and transaction strategy, contact me, Honolulu apartment building broker Christina Dwight at Commercial Investment Strategies. As the only firm in Hawaii exclusively engaged in apartment building buying and selling, allow our experience and expertise to help ensure your property's competitive positioning and maximize your sale price.