Land Use Controls & Regulations

How government powers, public regulation, and private restrictions shape the ownership and use of real estate.

PASS FIRST Chapter Focus
The exam does not merely ask whether an owner holds title. It asks what may legally limit the owner’s use of that title. Master the distinction between public controls and private controls, and learn to identify the correct remedy for each zoning problem.

Learning Objectives

• Describe the four primary governmental powers affecting real estate:

  police power, eminent domain, taxation, and escheat.

• Distinguish zoning, building codes, environmental rules, subdivision

  regulations, and comprehensive planning.

• Explain permitted uses, conditional or special uses, variances,

  rezoning, and nonconforming uses.

• Differentiate public land-use controls from private controls such as

  deed restrictions, restrictive covenants, easements, and association rules.

• Identify the legal effect of eminent domain and distinguish

  condemnation from inverse condemnation.

• Analyze exam scenarios involving setbacks, density, bulk requirements,

  zoning changes, and grandfathered uses.

• Recognize when a real estate broker should provide factual

  information, recommend verification, or refer a client to legal or governmental professionals.

Key Vocabulary

Term	Definition
Police Power	The government’s authority to regulate property use to protect public health, safety, morals, and general welfare.
Eminent Domain	The government’s power to take private property for a public use upon payment of just compensation and compliance with law.
Condemnation	The legal process used to exercise eminent domain.
Inverse Condemnation	An owner’s action seeking compensation when government conduct effectively takes or substantially damages property without completing formal condemnation.
Taxation	The government’s power to impose taxes and special assessments to fund public purposes.
Escheat	The transfer of property to the state when a person dies without a valid will and without legally recognized heirs.
Zoning	A local exercise of police power that divides land into districts and regulates permitted uses and development standards.
Comprehensive Plan	A long-range policy guide for a community’s development; it generally guides, but is not itself identical to, the zoning ordinance.
Zoning Ordinance	The legally enforceable local law establishing zoning districts, permitted uses, and development standards.
Setback	The minimum required distance between a structure and a property line, street, or other reference point.
Density	The number of dwelling units or amount of development allowed within a specified land area.
Bulk Regulations	Rules governing the physical size and placement of improvements, including height, lot coverage, floor-area ratio, and setbacks.
Variance	Permission to deviate from a specific zoning standard when the required legal criteria are satisfied.
Use Variance	Permission, where authorized by state and local law, to use land in a manner otherwise prohibited in the zoning district.
Development Standards Variance	Permission to deviate from dimensional or physical standards such as height, setback, parking, or lot coverage.
Special Exception / Special Use	A use allowed only after an administrative body finds that stated ordinance conditions are met.
Nonconforming Use	A lawful existing use that no longer complies with a later zoning rule.
Spot Zoning	A zoning change that singles out a small parcel for treatment inconsistent with surrounding property, often for the private benefit of one owner.
Building Code	Construction standards intended to protect public health and safety.
Certificate of Occupancy	Government approval indicating that a structure may be occupied for its approved use.
Subdivision Regulations	Rules governing the division of land, street layout, utilities, drainage, dedications, and infrastructure.
Restrictive Covenant	A private limitation on land use created through a deed, declaration, or recorded agreement.
CC&Rs	Covenants, conditions, and restrictions governing property in a planned community or condominium.
Special Assessment	A charge imposed on property that receives a particular benefit from a public improvement.
Moratorium	A temporary governmental pause on specified development or approvals.

Core Lesson

Ownership is powerful, but it is not unlimited. A fee simple owner possesses the broadest private ownership interest, yet the property remains subject to governmental powers, recorded private restrictions, and the rights of others. Exam questions frequently test which source of authority is creating the restriction and what remedy or approval the owner should seek.

The Four Governmental Powers: PETE

Memory Formula: PETE
P — Police power E — Eminent domain T — Taxation E — Escheat

Police Power

Police power is the broad authority of state and local government to regulate land for public health, safety, morals, and general welfare. Zoning, building codes, fire codes, occupancy limits, environmental regulation, and subdivision controls are common exercises of police power. Unlike eminent domain, a valid regulation does not ordinarily require compensation merely because it reduces an owner’s preferred use or market value.

A regulation may still be challenged if it is unconstitutional, arbitrary, discriminatory, procedurally defective, or so burdensome that it amounts to a compensable taking. For licensing-exam purposes, however, ordinary zoning restrictions are classified as police power—not eminent domain.

Eminent Domain and Condemnation

Eminent domain is the power; condemnation is the process. A government or other legally authorized condemnor may acquire private property for a public use, but it must follow required procedures and provide just compensation. A taking may involve an entire parcel, a strip of land for road widening, an easement for utilities, or another property interest authorized by law.

Compensation focuses on the property interest taken and legally recognized damages, not on the owner’s sentimental attachment. If government activity effectively takes property without filing a condemnation case, the owner may pursue inverse condemnation.

Taxation and Special Assessments

Taxation funds general governmental operations. Real property taxes are generally based on assessed value and applicable tax rates, subject to exemptions, deductions, credits, caps, and procedures established by law. Failure to pay may eventually lead to a tax sale or other enforcement process.

A special assessment differs from a general property tax. It is imposed because designated property receives a specific benefit from a public improvement, such as sidewalks, sewers, drainage, or street improvements. The exam may ask you to distinguish a general tax from a charge connected to a particular local benefit.

Escheat

Escheat prevents property from remaining ownerless. When a person dies intestate—without a valid will—and no legally recognized heirs can be found under the state’s succession laws, the property passes to the state. Escheat is not the same as eminent domain because it does not involve a taking for public use from a living owner in exchange for compensation.

Public Land-Use Planning

Communities plan before they regulate. A comprehensive plan expresses long-range policies for growth, transportation, housing, utilities, parks, commercial areas, industrial areas, and preservation. The plan is a policy guide. A zoning ordinance is the enforceable law that assigns districts and standards to land.

Exam Distinction
Comprehensive plan = community policy and long-range direction. Zoning ordinance = enforceable rules applied to parcels and districts.

Zoning Districts and Development Standards

A zoning map places property into districts, commonly residential, commercial, industrial, agricultural, mixed-use, or special-purpose classifications. The accompanying ordinance states which uses are permitted and what development standards apply.

Use regulations. Identify the activities allowed on the land, such as detached housing, multifamily housing, retail, offices, manufacturing, or agriculture.

Setbacks. Establish required distances from front, side, or rear property lines.

Height limits. Restrict the vertical size of buildings and structures.

Lot coverage. Limits the percentage of a lot occupied by buildings or impervious surfaces.

Floor-area ratio. Compares total building floor area with lot area.

Density. Controls the number of dwelling units or intensity of development.

Parking and access. Regulates parking spaces, driveways, loading areas, and circulation.

Landscaping and buffering. Separates incompatible uses and manages visual or environmental impacts.

Permitted, Conditional, and Prohibited Uses

A permitted use may be established when the owner satisfies the ordinance and obtains required permits. A special exception, conditional use, or special use is contemplated by the ordinance but requires individualized review against stated standards. It is not the same as changing the zoning classification.

A prohibited use is not allowed in the district unless the owner obtains a legally available approval, such as rezoning or a use variance where authorized. The correct path depends on local law and the type of relief requested.

Variances, Rezoning, and Appeals

A variance provides relief from a zoning requirement. A development standards variance typically concerns dimensional rules—such as a setback, height, lot width, parking count, or lot coverage. A use variance concerns the activity conducted on the property. Indiana law and the local ordinance determine which body may grant each type and what findings must be made.

Rezoning changes the zoning classification or map designation. It is a legislative action, usually involving the plan commission and the local legislative body. A variance does not rewrite the zoning map. An administrative appeal challenges an official’s interpretation or enforcement decision.

Decision Guide
Need a different district classification? Seek rezoning. Need relief from a dimensional rule? Seek a development standards variance. Need approval for a use specifically listed as conditional? Seek special-use or special-exception approval. Believe the zoning administrator misread the ordinance? File the authorized administrative appeal.

Nonconforming Uses and Structures

A lawful use may become nonconforming when a later zoning amendment prohibits it. Because the use was lawful when established, it may often continue subject to local rules. This is sometimes called being “grandfathered,” although the precise legal term is lawful nonconforming use.

Local ordinances commonly regulate abandonment, expansion, reconstruction after casualty, changes to another nonconforming use, and discontinuance. A buyer should never assume that a nonconforming use can be expanded, rebuilt, or resumed after vacancy. Verification must come from the responsible local authority and applicable records.

Building Codes, Permits, and Occupancy

Building codes regulate construction methods and safety. Zoning approval answers whether a proposed use and site arrangement are allowed; a building permit authorizes construction work under applicable codes. A certificate of occupancy generally confirms that the completed structure may be occupied for an approved use. These approvals address different questions and should not be treated as interchangeable.

Subdivision and Environmental Controls

Subdivision regulations govern the division of land and often address plats, roads, utility access, drainage, easements, dedications, and public improvements. Environmental controls may affect wetlands, flood hazard areas, stormwater, septic systems, wells, contamination, protected resources, and other conditions. Multiple agencies can have overlapping authority over the same project.

Private Land-Use Controls

Private controls arise from agreements or property interests rather than governmental police power. Common examples include restrictive covenants, deed restrictions, easements, leases, condominium declarations, and homeowners association rules.

Private restrictions may be more restrictive than zoning. A zoning ordinance might permit a fence, short-term rental, or detached garage, while recorded covenants prohibit it. Compliance with one set of rules does not guarantee compliance with the other.

Two-Layer Rule
A proposed use must satisfy BOTH applicable public regulations and enforceable private restrictions. The stricter rule may control the owner’s practical ability to proceed.

Enforcement and Due Diligence

Government violations may lead to stop-work orders, fines, injunctions, permit denial, or removal of unlawful improvements. Private restrictions are generally enforced by parties who hold enforcement rights, such as an association or another benefited owner. A broker should help clients identify the need for investigation without guaranteeing a legal conclusion.

Useful due-diligence sources include the zoning map, zoning ordinance, planning or zoning staff, recorded plats, title commitments, surveys, association documents, permit records, certificates of occupancy, environmental reports, and legal counsel. Online maps are helpful screening tools, but written verification may be necessary for a transaction-dependent decision.

Indiana Law Spotlight

Partially verified against current authority. Indiana planning and zoning authority is organized primarily under IC 36-7. That title establishes the statewide enabling framework for local plans, zoning and subdivision ordinances, plan commissions, boards of zoning appeals, variances, special uses where authorized, and administrative appeals. The governing local ordinance and record still control the standards, application, evidence, hearing, and approval for a particular parcel. Indiana eminent-domain and condemnation procedures are principally addressed in IC 32-24. Indiana Constitution Article 1, Section 21—not Article 10—contains the state protection requiring just compensation when property is taken for public use. For exam and practice purposes, never promise that a particular variance, rezoning, permit, or nonconforming use will be approved. Indiana approvals are fact-specific, locally administered, and subject to current statutes and ordinances. Still open: The precise variance findings, special-use procedures, nonconforming-use continuation or abandonment, spot-zoning claims, regulatory takings, inverse condemnation, enforcement remedies, and local requirements remain in the central verification queue. Review the controlling ordinance and current legal authority rather than promising an approval or vested-right outcome. Indiana Code Title 36 ↗ · Indiana Code Title 32 ↗ · Indiana Constitution ↗

National Exam Alert
The national exam commonly tests the source of the restriction and the correct vocabulary. Remember: police power regulates; eminent domain takes; taxation raises revenue; escheat transfers property when no legal heirs exist. Condemnation is the process, not the power. A variance is relief from a rule; rezoning changes the classification.

Common Exam Trap
Do not call every land-use limitation “zoning.” Building codes, subdivision regulations, environmental laws, deed restrictions, easements, and association rules are different controls. Also, a special exception is not automatically an exception to the law; it is a use the ordinance conditionally allows when stated criteria are met.

Memory Trick
P-E-T-E identifies governmental powers: Police power = regulate Eminent domain = take Taxation = charge Escheat = receive ownerless property For zoning relief, remember V-R-S-A: Variance = relief from a standard Rezoning = change the district Special use = conditional approval Appeal = challenge an official decision

Broker Insight

A zoning answer should rarely begin and end with an online map. A strong broker asks: What is the current classification? Is the present use legally established? Are there open violations? Is a certificate of occupancy available? Do private restrictions impose tighter limits? What approvals are required for the buyer’s intended use? Document the source of information and recommend appropriate expert review when the client’s decision depends on it.

Chapter Summary

• Ownership is subject to governmental and private limitations.

• The four governmental powers are police power, eminent domain,

  taxation, and escheat.

• Zoning is an exercise of police power. Condemnation is the legal

  process used to exercise eminent domain.

• A comprehensive plan guides long-range development; a zoning ordinance

  imposes enforceable district and development rules.

• Variances, special uses, rezoning, and administrative appeals solve

  different land-use problems.

• A lawful nonconforming use may continue subject to local restrictions,

  but continuation does not guarantee expansion, rebuilding, or resumption after abandonment.

• Building codes, permits, certificates of occupancy, subdivision rules,

  and environmental controls regulate different aspects of development.

• Private restrictions can be stricter than public zoning, so both must

  be reviewed.

• Indiana land-use approvals are administered locally within authority

  established by state law.

• Brokers should provide sourced factual information, avoid legal

  guarantees, and recommend professional verification when appropriate.

Practice Questions

1. Which governmental power is the basis for zoning ordinances?

A. Eminent domain

B. Taxation

C. Escheat

D. Police power

2. A city acquires a strip of private land for road widening and pays the owner. Which power is being exercised?

A. Police power

B. Taxation

C. Eminent domain

D. Escheat

3. The legal process used to exercise eminent domain is called:

A. Dedication

B. Variance

C. Annexation

D. Condemnation

4. Which statement best describes a comprehensive plan?

A. It is the deed restriction for every parcel

B. It replaces all zoning ordinances

C. It automatically grants building permits

D. It is a long-range policy guide for community development

5. A property owner needs relief from a required 25-foot side-yard setback. The owner will most likely seek:

A. A tax appeal

B. Escheat

C. A development standards variance

D. A certificate of occupancy

6. A use that was lawful when established but no longer complies with a later zoning amendment is generally called:

A. An illegal spot zone

B. An easement by necessity

C. A special assessment

D. A lawful nonconforming use

7. Which is a private land-use control?

A. Zoning ordinance

B. Building code

C. Restrictive covenant

D. Subdivision ordinance

8. A zoning ordinance permits a fence, but recorded CC&Rs prohibit it. Which statement is most accurate?

A. The zoning permission automatically cancels the CC&Rs

B. The owner may ignore whichever rule is stricter

C. The CC&Rs are a form of eminent domain

D. The owner must consider both public and private restrictions

9. Which governmental power prevents property from remaining ownerless when a person dies without a will or legal heirs?

A. Police power

B. Eminent domain

C. Taxation

D. Escheat

10. A charge imposed on selected properties because they benefit from a new sewer line is most likely:

A. A variance fee

B. A general income tax

C. A special assessment

D. A deed restriction

11. Which approval most directly confirms that a completed building may be occupied for its approved use?

A. Comprehensive plan

B. Certificate of occupancy

C. Plat dedication

D. Rezoning petition

12. Which statement correctly distinguishes zoning from building codes?

A. Building codes are private restrictions

B. Zoning applies only to vacant land; building codes apply only to occupied land

C. They are identical terms

D. Zoning regulates use and site development; building codes regulate construction and safety

13. An owner wants a parcel changed from residential to commercial classification. The owner most likely needs:

A. A development standards variance

B. Rezoning

C. A certificate of occupancy

D. An easement

14. A use listed in the ordinance as allowable only after stated conditions are reviewed is commonly called:

A. A special exception or special use

B. An automatic variance

C. A taking

D. A tax exemption

15. Which statement about a variance is most accurate?

A. It transfers title to the government

B. It grants relief from a zoning requirement when legal criteria are met

C. It is identical to rezoning

D. It eliminates private deed restrictions

16. Government activity effectively takes the use or value of property without filing formal condemnation. The owner’s claim is commonly called:

A. Inverse condemnation

B. Adverse possession

C. Escheat

D. Partition

17. Which is most likely governed by subdivision regulations?

A. The division of one tract into multiple building lots

B. The interest rate on a mortgage

C. The commission paid to a broker

D. The probate of a will

18. A local rule limiting the number of housing units per acre is a regulation of:

A. Density

B. Escheat

C. Title insurance

D. Consideration

19. A requirement that a building remain 30 feet from the front lot line is a:

A. Setback

B. Special assessment

C. Deed

D. Tax lien

20. Which statement about nonconforming uses is safest for a broker to give a buyer?

A. The use can always be expanded

B. The use can always be rebuilt after destruction

C. The buyer should verify its legal status and limits with the local authority

D. Grandfathered status eliminates all zoning rules

21. Spot zoning generally refers to:

A. A temporary building permit

B. Special treatment of a small parcel inconsistent with surrounding zoning

C. The mapping of flood zones

D. A private easement

22. A stop-work order is most likely a method of enforcing:

A. A governmental construction or land-use requirement

B. A tenant’s right of survivorship

C. A mortgage prepayment clause

D. An intestate succession rule

23. Which item is the best source for determining recorded private restrictions affecting a parcel?

A. A weather report

B. The title and recorded land records

C. A social media listing

D. The comprehensive plan alone

24. A broker tells a buyer, “Your variance will definitely be approved.” What is the primary problem?

A. Brokers must never discuss zoning

B. Approval is fact-specific and outside the broker’s power to guarantee

C. Variances are granted by lenders

D. A variance is always automatic

25. Which pair is correctly matched?

A. Police power—taking property for a highway

B. Eminent domain—regulating building height

C. Taxation—raising public revenue

D. Escheat—granting a setback variance

Answer Key

Question	Answer	Question	Answer
1	D	14	A
2	C	15	B
3	D	16	A
4	D	17	A
5	C	18	A
6	D	19	A
7	C	20	C
8	D	21	B
9	D	22	A
10	C	23	B
11	B	24	B
12	D	25	C
13	B

Score Check
23–25 correct: Strong command of the chapter. 20–22 correct: Review zoning relief and public-versus-private controls. 17–19 correct: Revisit PETE, nonconforming uses, and the approval pathways. 16 or fewer: Reread the Core Lesson before advancing.

Legal Reference Note

This chapter is educational exam preparation, not legal advice. Indiana statutes, administrative rules, local ordinances, and examination outlines may change. Current primary authorities should be checked before publication and before applying a rule to an actual transaction. Draft reviewed against official Indiana sources available July 2026, including Indiana Code Titles 32 and 36 and the Constitution of the State of Indiana.