Glossary of Terms
A non-conforming use is a property being used in a manner that was legally established under prior zoning regulations but no longer complies with current zoning requirements. The use is permitted to continue because it predates the zoning change that made it non-compliant.
In valuation and lending, non-conforming use status raises important questions about a property's future utility and marketability. If the structure were destroyed or significantly damaged, current zoning may prohibit rebuilding in the same manner, which can affect insurable value, financing eligibility and buyer demand.
Appraisers must identify and address non-conforming use in the report, including an analysis of how the market responds to the condition. Loan originators should flag non-conforming properties early, as many lenders require confirmation that the use can be legally rebuilt before approving financing.