Legal Question in Real Estate Law in California

Re: Property Zoned Central City-Commercial

My guess is that it's up to the lenders to decide whether each would treat this as a residential property acquisition loan. My experience with farm purchase deals is that if the house is less that about 50% of the value of the entire property ("excess" land, barns, etc.) it becomes increasingly difficult to get the property financed as a residence and more likely the collateral will be looked at as business or income property. It probably works the same way when the mix is residential and commercial structures on a city lot.

In addition to lender policy there may be questions as to whether the loan qualifies as a single-family residence deal for repurchase of the note by various programs, e.g. FHA. Here again, the answer would depend on the weighting of residential and commercial values, and the prospective lenders would look at the appraisals and see whether the property and proposed loan will qualify.

There may be other contexts in which the issue of whether the proposed sale (and loan) is residential or not, and different yardsticks may apply. For example, whether this is a one-to-four unit residence sale or a commercial-property sale will affect the disclosure duties of the real estate agents. Here, I think the deal would be treated as residential in nature unless the residential component were truly not significant in the price.

Again, this is a guess based on general principles and particularly since I lack details of relative value and the reason for the question, you should use this answer with caution.