What is Annexation in Real Estate? | Terms, Types & FAQs

If you own property in an unincorporated township, starting an annexation process could save your bottom line.

It can also open economic doors, giving you access to greater resources and saving you money along the way. The process comes with a mixture of pros and cons, and understanding the details of both will help you make an informed decision.

Here’s a rundown of what annexation means for your property.

 

What Does Property Annexation Mean?

Annexation occurs when personal property/territory in a township becomes part of a larger municipality, such as a city or village. When this happens, the annexed property is absorbed into the larger land, effectively serving as a real estate extension.

To qualify for annexation, the property must share a border with the municipality. This prevents the creation of “floating outposts” from City A in the middle of Township B.

 

Common Real Estate Annexation Terms to be Familiar With

• Fixture: This term refers to annexed personal property that is now part of the larger land. When personal property attached to the land gets annexed, it becomes a fixture.
• Intent: This plays a big role in whether or not a fixture can be considered annexed. If the attachment or improvement made to the land was made in an effort to improve said land, this intent makes the fixture annexable.
• Legal Implications: If a property sale includes fixtures, legal implications are part of the package. Fixtures can affect factors related to money transfers, property ownership, local laws and more.

 

Types of Property Annexations

• Fixture: This term not only describes property that can be annexed, but a type of annexation, too. When personal property becomes a permanent part of real annexed property (such as appliances and heating/cooling units), it becomes a fixture annexation.
• Land: This type occurs when municipal boundaries are expanded into adjacent land, thereby absorbing that land and affecting the value and use of the property.
• Involuntary: As the name implies, this type of annexation is beyond the control or approval of the property owner, and is usually carried out by a government entity.
• Voluntary: Conversely, this type occurs when the property owners initiate the annexation themselves, typically to gain access to municipal services or improve their zoning regulations.

Advantages of Annexation

• Services: A municipality’s water and sewer rates may be less expensive, and commercial properties can benefit from switching from a township’s system. The municipality is also responsible for street maintenance and snow removal.
• Police and Fire: An annexed property is under the jurisdiction of the municipality’s police force and fire and rescue. This means you can rest easier knowing emergency services are readily available in your area.
• Property value: Annexation to a municipality increases property values and makes residential and commercial properties more attractive to the real estate market. This can be a huge benefit for property investors.
• Voting: Becoming a part of a municipality means you can vote for its elected officials, who may, in turn, affect your property with ordinances and regulations.

Disadvantages of Annexation

• Higher Property Taxes: In most cases, annexed properties will be subject to increased taxes, which can be a significant financial burden on property owners.
• Less Autonomy: Property owners who are annexed may feel a loss of control since they could come across new zoning laws, building codes or other regulations they had not previously experienced.
• Increased Tensions: Annexation could cause conflicts between the property owner and the annexing entity due to regulations a property owner could disagree with or think they’re being unfairly targeted over.
• Lowered Value: Depending on the circumstances, an annexed property could decrease in value due to factors such as increased taxes or reduced desirability based on location and regulations.

 

Frequently Asked Property Annex Questions

How Do I Know if a Property Has Been Annexed?

• Contact Your Local City or Town Hall: Local government entities usually annex real estate. By contacting your local city or town hall, they can provide information on the jurisdiction and annexation of a property or how to further locate this information.
• Check the Property Deed:The property deed may include information about annexation, especially if it has occurred recently. You can obtain a copy of the deed by contacting your local county recorder.
• Search the County’s Property Records: The county assessor's office maintains records of all properties within the county. You can search their database to see if the property in question is listed as being within city limits or having been annexed.

How Does Annexation Work?

Now that you’ve decided to annex your property, the fun can really begin. Residential and commercial property owners must present a petition for annexation to the county commissioners.

You may file to annex your property if:

• All property owners in the proposed territory file petitions
• A majority of property owners in the proposed area agree to a single petition
• The property is not “unreasonably large”
• The benefits of the annexation and surrounding areas outweigh the detriments

Next, the township and annexing municipality must agree to the terms of the petition. The municipality must also provide municipal services to the annexation and set an operation timeline. You can petition for annexation if your property qualifies as an economic development project. Tax commissioners must certify that your project costs at least $10 million with an annual payroll of over $1 million.

Economic developments include:

• Industrial
• Commercial
• Distribution
• Research and development

How Long is the Real Estate Annexation Process?

Timelines vary depending on the property, potential appeals and municipality/township compliance. You’ll likely need a decent amount of patience since it takes several months to complete an annexation.

Signatures on a petition must be taken no more than 180 days before the filing date. Once you file your petition, the township and municipality have 30 days to accept or object to the proposal. An annexation takes effect 30 days after the passage of the resolution.

 

Conclusion

Annexation is a multi-layered, often complex process, but whether you’re initiating the process or having your property annexed by another entity, knowing the facts will help keep your head above water and your finances in balance.

Here are the biggest takeaways to hold onto:

• Remember the importance of defining a fixture and how it impacts the annexation
• Know the intent of a fixture and how it factors into its inclusion
• Understand the legal implications involved
• Annexations can be both voluntary and involuntary
• Annexed property can affect you both positively (increased access to emergency and maintenance services, increased property value, voting possibilities) and potentially negatively (higher taxes, less autonomy, increased tensions)
• Your petition will need to go through the proper channels and procedure in order to be considered

If you need a hand navigating the complexities of property annexation, purchasing and investing, talk to the experts at DRK. We’ll guide you, answer your questions and help you make the most of your real estate venture.

You can scout commercial real estate available in the Columbus, Ohio, area here.

Until next time,

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