Subdivision Ordinances: What’s Regulated, What’s Not

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Richard Ducker

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One of my colleagues once said that the law of land subdivision control had to be one of the most obscure and arcane areas of the law that one could imagine. After initially taking offense (since I took some proprietary pride in my knowledge of this subject), it occurred to me that what was needed was for someone to shine some light into this dark corner of the law. One of the more technical (but important) topics is the scope of coverage of local government subdivision ordinances. This blog is devoted to the definition of “subdivision” for regulatory purposes. In May a follow-up blog will be devoted to the exceptions to this definition, as set forth in North Carolina’s land subdivision control enabling statutes.

What types of land division fall within the ambit of local subdivision ordinances? In North Carolina the answers are primarily found in the municipal and county subdivision enabling statutes (G.S. 160A-376, municipal; G.S. 153A-335, county). These statutes govern the coverage of city and county subdivision ordinances by defining the term “subdivision” for regulatory purposes. A truncated portion of G.S. 160A-376(a), which includes the definition without certain exemptions, is set forth below:

§ 160A 376. Definition.
(a) For the purpose of this Part, “subdivision” means all divisions of a tract or parcel of land into two or more lots, building sites, or other divisions when any one or more of those divisions is created for the purpose of sale or building development (whether immediate or future) and shall include all divisions of land involving the dedication of a new street or a change in existing streets. . .

In 1975 the North Carolina Attorney General rendered an opinion that the subdivision enabling statutes pre-empt the regulatory field and that local ordinances must conform to the statutory framework, including the scope, coverage, and exemptions of the statutes. 44 N.C. A.G. 251 (1975). More recently, the North Carolina Supreme Court ruled in Three Guys Real Estate v. Harnett County, 345 N.C. 468, 480 S.E.2d 681 (1997) that the general authority of a county to regulate subdivisions (G.S. 153A-331) is insufficient to allow a county to regulate a division that is expressly exempt from regulation. As a result, unless a city or county is the subject of a local act that diverges from the scope of coverage of the general statutes in some way, one may expect that a local subdivision ordinance definition must mirror state law.

Another issue concerns how many lots must be created before subdivision regulations come into play. Prior to 2005, the enabling statute applied to “divisions into two or more lots, building sites, or other divisions into two or more lots, building sites, or other divisions for the purpose of sale or building development (whether immediate or future).” The 1975 Attorney General’s opinion cited above declared that a farmer owning a fifty-acre tract was not subject to regulation if he conveyed title to a one-acre parcel of land split off from his farm. According to the opinion, the farmer’s residual tract of land might not have been created for sale or building development purposes. In part because of this opinion some local governments (particularly rural counties) adopted an interpretation that the “first lot out” was exempt. Legislative amendments made in 2005 removed this possible ambiguity by providing that “subdivision” occurred when “any one or more of those divisions is created for the purpose of sale or building development (whether immediate or future) . . . “ (Italicized language added.)

The language about “sale or building development” has also demanded interpretation. Is it a subdivision to divide a tract into defined areas for development with each area subject to a long–term ground lease? What little case law there is on point suggests that the answer is yes, if the individual lots or divided sites are defined clearly in the lease and the lessee is expected to build on the site. Thus a site plan for a shopping center that identifies outparcels for lease as well as for sale may be trated as a subdivision.

The statute speaks of divisions “of a tract or parcel of land.” What about the establishment of a condominium project? Can that be regulated as a “subdivision”? The widespread consensus in this state is that the creation of typical condominium units or time shares does not involve subdivision to the extent that the individual property interests established do not include interests in the land itself.

What about divisions arising out of the settlement of an estate? Suppose that the owner of a small 25-acre farm prepares a will that specifically describes the three portions of the owner’s farm that are to be distributed to the three children when the owner dies. Courts have generally found that that these occasional examples of “testamentary subdividing” are not for the “purpose of sale or building development.” A somewhat different situation arises when the decedent leaves undivided property to his heirs by will or by intestacy. For each heir to take title to his own separate portion of the property, the property must be divided. One method is by voluntary partition whereby tenants in common all agree to exchange deeds dividing their commonly-held parcel of land into divisions representing equal shares for each. Is a voluntary partition of land a “subdivision” for purpose of G.S. 160A-376 and G.S. 153A- 335 if done in connection with the settlement of an estate? Apparently not in North Carolina, according to the court in the 1974 case of Williamson v. Avant, 21 N.C. App. 211, 203 S.E.2d 634 (1974), cert. denied, 285 N.C. 596 (1974). In that case the court declared that a “conveyance made for the purpose of dividing up the estate of a decedent among his heirs was not a ‘division of land for immediate or future sale or development’ within the meaning of G.S. 153-266.1 et seq. ,” the predecessor statute to G.S. 153A-335, which contains essentially the same language. The heirs apparently agreed to a voluntary partition of the commonly owned property received from the decedent and took the additional step of having a plat prepared indicating the lots to be distributed to each. The court did not indicate how many lots were distributed to each heir or how long after the decedent’s death the division was made.

The question remains whether tenants in common who purchase their property outright, rather than taking the property through a decedent’s estate, may circumvent subdivision regulations by voluntarily partitioning among themselves a property that is suitable for development. Courts in other states have refused to recognize the façade of a voluntary partition and have found an intention to subdivide lot for sale or development in such situations.

Suppose that lots have been created that either are outside the scope of “subdivision” or are expressly exempt from the definition. Does zoning apply to those lots? Even if the zoning ordinance includes subdivision-ordinance-like standards? According to Tonter Investments, Inc. v. Pasquotank County, 199 N.C. App. 579, 681 S.E.2d 536 (2009), cert. denied, 363 N.C. 663 (2009), the answer is yes. Pasquotank’s zoning regulations for the county’s Agricultural District prohibited residential uses. Furthermore, no building or structure was allowed in this district on a lot created after the effective date of the provision was amended unless (1) the lot included frontage of at least 25 feet on a state road or a road approved under the ordinance and (2) the lot was located within 1,000 feet of a public water supply. The court held that these standards were within the scope of the county’s zoning authority and could be applied to lots that were not subject to the county’s subdivision ordinance.

Now you must admit, these parts of the law of land subdivision control are not that obscure, not even arcane. Check in on May 31 when we will discuss the specific exemptions to land subdivision ordinances.

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12 Responses to Subdivision Ordinances: What’s Regulated, What’s Not

  1. Rodger Lentz says:

    Great article Rich. Thank you for doing it. I look forward to reading more next month.

    Question – how would lots created for conservation or open space standards be looked at. For example a zoning ordinance requires open space, stormwater regulations require conservation areas, or zoning might require tree preservation areas On a separate lot (Charlotte does this one). Are those lots subject to subdivision requirements? One might argue that the lot is required to build the project overall, another might argue that no building will be built on the specific lot.

    • Rodger,

      Yours is a really good practical point. In addtion to those areas you mention a subdivision may also include a special area for certain utility installations that is not intended to be a building site. There are a variety of areas that are created that are not for the purpose of sale or building development. I suppose most developers/subdividers and local governments would expect that these areas not be treated as “building lots.” As such, they do not need to meet the ordinary standards that apply to “building lots.” Whoever prepares the plat may need to add a note on the plat that particular areas are not intended for building purposes and that no building permit shall be issued for those areas or spaces. Does the existence of these areas somehow imply that they are not part of a “subdivison”? Not at all. These areas are technically not “created for the purpose of sale or building development.” However, they do not have to be, so long as there is even one building lot or building site in the subdivision that is created for the purpose of sale or building development.

  2. Jim Scarbrough says:

    Do subdivision lots exist just because a subdivision plat is recorded if those lots are not developed? The N.C. tax assessors say ‘yes’ and tax them as partially completed lots. In Villages v. Cabarrus Co Tax Supervisor, filed COA on Feb 15, 2011, I tried to present the issue but was thrown out on a procedural issue (my client never appealed the valuation so I tried a writ of mandamus)

    • Mr. Scarbrough,

      If I am not mistaken, the case you refer to is The Villages at Red Bridge, LLC v. Cabarrus County , __N.C. App. __, 704 S.E.2d 925 (2011). As I understand it, your client was trying to find redress concerning a situation in which a 40-acre parcel was assessed by the county for property tax purposes as 116 separate lots. No lots had been sold or were for sale . Some of the interior streets had been constructed, and some lots had been partially cleared. However, no utilities had been installed, and the subdivision was accessible from the main road only by four-wheel-drive vehicle.

      One relevant statute, as far as I can tell, is G.S. 105-287(d) which provides in part that “if a tract of land has been subdivided into lots and more than five acres of the tract remain unsold by the owner of the tract, the assessor may appraise the unsold portion as land acreage rather than as lots.” It goes on to say that “(a) tract is considered subdivided into lots when the lots are located on streets laid out and open for travel and the lots have been sold or offered for sale as lots since the last appraisal of the property.” Arguably subdivision activity had not progressed to the point where it was appropriate to assess the tract as “subdivided into lots” for assessment purposes.

      The point I would make is that “subdivided into lots” has a different meaning in different legal contexts. In the context of land subdivision regulation, land is generally viewed as being subdivided into lots when the final plat for the area is recorded. However, often times developers are allowed to make improvements to a subdivison after final plat approval and recordation, under the terms of the subdivison ordinance, and the regulatory process does not come to a close until all of the required improvements are installed, inspected, and accepted by appropriate authorities.

      For assessment purposes, however, “subdivided into lots” depends specifically on whether streets are open for travel and whether lots have been offered for sale.

  3. Carl Parker says:

    Finally, a clear and concise explanation of these statutes. This should be sent to every planning department in the state.

    Thank you.

  4. Richard, I appreciate the separate blog posts on subdivisions as well.
    On at least two occasions this past year,I have encountered subdivisions depicting inaccurate information based on inaccurate and even misleading information supplied to the LGE permitting authority. Unlike Building Permits and other types of approvals, I note no statutory or ordinal provisions so that the LGE may revoke or modify the plat on its own without the cooperation of the applicant. Can you enlighten?

    • Steve,

      Sorry for the delay in responding to your comment. I too know of no statutory authority for a local government to revoke the approval of a subdivison plat. For that matter I have never seen an ordinance provision that addressed such a matter. I’m inclined to think that revocation of such an approval is nonetheless possible. The question is how a local government would accomplish it. A recorded plat obviously cannot be redacted or expunged from the records in the register of deeds office. It is possible that some sort of instrument or order executed by the plat approval agency could be recorded in the chain of title that declared that the approval of a certain plat was withdrawn, void, and no longer effective. Notice to the owner of the platted land would have to be given and also, I suspect, the right to a hearing or an appeal of the decision.

      There are other remedies that a local government could pursue (e.g. equitable remedies, civil penalties, possibly declaring a default with respect to particular financial performance guarantee, withholding buildng permits, or even criminal prosecution). But these remedies and sanctions are hardly ideal. So revocation of plat approval is worthy of discussion.

      Rich Ducker

  5. You were speaking of condo developments not being subject to subdivision law “to the extent that the individual property interests established do not include interests in the land itself”.

    Could you elaborate on what this means? What do you mean by “interests” in the land?

    We are trying to longterm resident-develop a sustainable community of 330 acres. We own the entire land collectively, and are granting internal longterm leases to our members to build homes. We want individual ownership of the actual homes we build, but not of the land.

    Are we subject to subdivision law? Are there any other legal-structural options for us?

    Thanks very much,
    Michael Whitmire

    • Mr. Whitmire,

      I cannot say for sure just what the status is of your leasehold arrangement. Much would depend on the way the collective is organized and the nature of documents conveying title. One important consideration might be whether individual homeowners have a right to use certain portions of the land in the immediate vicinity of their homes that is not commonly shared with others.

  6. Steve Parris says:

    I live in a townhome subdivision in Mooresville NC. The problem we have is the backside of one of the 4 unit townhomes has a gully washing out from storm water from adjoining properties. This nees to be corrected to avoid washing out a private drive to the units, We think that there was insufficent drainage when it was developed. The subdivision is 14 years old and the town is saying they only keep development records 7 years. Is this correct?

    • Mr. Paris,
      Sorry to hear about your stormwater problems. Unfortunately, approval by a local government of a subdivision or other land development project does not serve as a promise or guarantee that what the ordinance requires is sufficient to prevent or alleviate all development-related problems that might arise. It might be interesting to see what kind of requirements were in place when the subdivision was first developed. But if a town has kept its subdivision plat approval records for as long as seven years before disposing of them, it is very likely that the town has complied with state laws governing records retention and disposal.

      You did not say so, but I assume that your townhouse subdivision involves common open area managed by a property owners or townhome owners’ association. If the stormwater erosion affects that common property, I assume that it is the association that may have to take steps to remediate.

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