Real Estate Lot Consolidation
Note: This podcast is no longer available, but please see below for the transcript of the podcast
When we talk about lot consolidation, we need to be careful of what we’re doing. And frankly, we need to be careful about what we’re doing before we buy. If anybody’s involved in the purchase or sale of dirt, or frankly the use of it, they need to be a long-term planner. I mean, we all know life has its way with you. People get hit by a bus, people get injured, people lose their jobs, kids die, parents die, things happen. But the land remains.
One of the more interesting things we run into is a question of how you handle a lot consolidation. A lot consolidation . . . when I say that I mean there’s a parcel that’s being created and usually it’s in a plat. So when a surveyor goes out and creates a plat of your neighborhood, they divide up into streets, and lots, and alleys, and all kinds of things but a single lot would be owned by a single title owner. And then there’s the word parcel. Now the word parcel is generally used to mean something that is outside of a platted area. So you have lots and parcels.
Now, the question arises, what if an owner wants to consolidate? Maybe a lot with a lot, or a lot with a parcel, or a parcel with a parcel? But what types of things do they run into? And, boy, we have really seen a number of exciting examples. Let me just start with one that occurs all the time in Idaho. Back in the day, and I mean the whiskey and corn dodgers days when people were coming out here and there were no cars. They just had roads, and the roads were for horses. They would make lake shore lots that were maybe 50 feet wide and 100 feet deep, and then there’d be a road going to 25 of them. This happens on Lake Ponderay. I’ve seen it in Bonner County, it happens in Kootenai County, it happens over in Washington over in Stevens, you know, Newman Lake area, up in ferry County, it really happens all over the place. These lots are really too small to use. If you have a county land use plan that says, well, you have to have a setback of five feet on either side, well, you take a 50 foot lot. Well, now you’re down to 40 feet, which, frankly, today is the size of some ordinary living rooms. And so it becomes impossible to use these lots.
People come to us and say, can we consolidate these lots? Well, sure you can. And what are some of the things that you might think about? First of all, there is a matter of setbacks. And setbacks, as you know, are places where you can’t put a building or a structure. And these are setbacks from the property line. So the building or structure has to be set back a certain distance from the property line. According to the local ordinance, it could be a city ordinance or a county, they’ll say well, five feet minimum from the property line, 10 feet minimum in some circumstances. But you know, we do need to be able to get those firemen up to the side of your house so they can put out a fire. We need to get the water guy out there so they can dig up the sewer and replace the old one. You know, that old clay pipe they put in there in the 1920s, how is somebody going to get in there without a setback? So, you really gotta have setbacks.
When you consolidate a lot, so you had two squares that are just perfectly square or rectangular lots right next to each other. And all you want to do is remove the line in between them. Then you’ll end up with, instead of a 50-foot-by-100 next to a 50-foot-by-100, you’ll now have a 100-by-100 square foot lot. So let’s just talk about setbacks. Obviously with the boundary line removed between the two lots, there are no setbacks there anymore. The setbacks all retreat to the borders of the lot. So now you have moved your setbacks so that they’re all on the edges of the parcel. That can be very handy because now you can go ahead and put in your swimming pool, you can put in your building, you could add a pole bar,n or something like this. You could add a driveway that goes down to the lake, put your boat in, and all that type of thing. Some people haul their docks out in the winter because of the ice conditions. So all these things are facilitated by a lot consolidation.
The only problem with a lot consolidation in these circumstances is one needs to be very careful that there are no easements or rights-of-way, that are not going to be changed, because you can’t change them. Say we go back to our example where we have two rectangular lots that have one boundary. We want to get rid of that line in the middle. Now remember, some easements are created where the owner will say they’ll convey the lot. Then they’ll say, but I’m going to reserve an easement over the east 30 feet of the lot. Well, if the east 30 feet of the lot is on the east border of the lot, and you go consolidate and remove that east border, that easement is still there.
And so now you have a situation where you’ve consolidated your lats. But there’s an easement straight down the middle of your lot. And this is not functional. This is one reason why we recommend people get a very thorough review of the documents in the public record before they purchase real property. If you don’t know what you’re buying, then you might end up with an easement somewhere in the middle of it. And then your plans for consolidation can be smashed. You find the problem and then you go to put in in a building permit. The local building authority says, you know, you can’t really build there because there’s a public right-of-way that runs straight down the middle of your newly consolidated lot. This is not a good thing.
So let’s let’s just keep those principles in mind. And let’s go outside of the plat for a minute. This is where it can get really dicey. Because let’s talk about plat. What is a plat? A plat is a graphic description of a land subdivision. Most plats are created by property owners. And if you’ve been listening to our podcasts, you know the difference between a plat and a survey. A survey is just the opinion of the the person that made the measurements in the field and drove some stakes. The surveyor, that’s his or her opinion. And surveyors definitely differ in their opinions. And so a survey does not make any difference as far as the actual location of the boundary lines, or corners, or anything else. You might see several sets of corners, and it’s still only several surveyors’ opinions.
But when we get to a pla,t here we have a survey that has what’s called an owner certificate or an owner statement on it. And the owner says, I own all this land that’s being platted and subdivided, and here is a description of it, and they give the legal description of it. And then there are usually restrictions on the plat that will say something like, each lot owner will have the responsibility of drilling their own culinary water, water you can you can drink, as opposed to irrigation water. And for example, they may say all the roads in this plat are dedicated to the public. Or they may say all the roads on this plat are dedicated to the homeowner’s association, who will be responsible for its maintenance, these types of things are on the plat.
When the owner signs that plat, what they are doing is making a conveyance of real property interests in if they make a dedication to a public entity, then they’re making a conveyance of a property interest in a roadway to the local county or the local town. The town can then take it over, be responsible for snow plowing, water, sewer, utilities, all that within the boundaries of those roads. If they make a conveyance to the association, the homeowners association, why then this becomes a private roadway and the association has to maintain it. So now all the platted lot owners are going to have road maintenance responsibilities. Now, of course the association takes care of it and then the owners just pay to have that done. So now that we know the difference between the survey and a plat, and we know the difference, we know what a plat can do. That a plat is technically a conveyance instrument, just like a deed or any other grant.
Let’s go back to our lot consolidation situation. Now there are two situations here and this is why it is so important to talk to a real property attorney before you purchase the dirt. You know, you can’t honestly, folks, you should not just go out and find a realtor and just start buying real estate. You have no idea what you’re buying. Let’s talk about this platted situation. Say we are inside the plat, two lots inside the plat, we want to consolidate. Now we have this same situation with the setbacks. We have the same situation with the easements. You can’t wipe out easements, and you can’t wipe out right-of-ways, and that type of thing by doing a lot consolidation.
Now, what if I take a lot that is inside the plat, and I want to consolidate it with a parcel outside the plat. Now, here’s where we run into trouble. And we have had some some real exciting situations when that occurs. Because now, let’s think about it. When the plat is created, the owner signs the plat. And the owner gives responsibility for administration of the plat to a homeowner’s association. There are literally thousands of homeowners associations. Most counties of even a small size require plats to have CC&R’s (these are Conditions Covenants and Restrictions). And they will require a nonprofit association of some sort to be formed to administer the CC&R’s, which is to say, enforce the rules ,care for the roads, take care of the shared well agreements, or the shared septic, or what you have. And so these associations under law have a an area of governance, a physical area within which they’re allowed to govern, just like a city, or just like a county, or a state. But this time, it’s a private association. So here’s an area of governance for an association, that is the plat. That is their legal jurisdiction. Way back in the day, we would call it their bailiwick. That’s the area over which they have responsibility and control. Now, we add in by consolidation. We have a lot inside the plat that abuts a parcel outside the plat. So now you have a problem. Why do we have a problem? The first question is, did I consolidate the parcel into the plat? Or did I remove the lot from the plat by consolidating with an exterior parcel? Here’s the problem of governance. The association has absolutely no ability to govern that parcel outside the plat. So they have a problem. Because if somebody who consolidates a lot with a parcel outside of the plat just wants to start hauling trailers up there and having giant parties on weekends and blowing off fireworks and have a shooting range and all this type of thing and they leave giant piles of garbage, what is the association supposed to do about that?
The answer is little or nothing, because they have no power to govern that piece of dirt that was allegedly pulled into the plat. Now here, let’s make it better. Say every lot in the plat is served water by the association. In fact, one of the primary functions of the association in a given case may be the provision of water to lots in the plat. Well, then someone consolidates a lot in the plat with a parcel outside the plat, hauls a bunch of trailers up there, and wants the association to serve that parcel water to all those different people. Now, first of all, the association can’t serve that parcel outside the plat, they have no governing power. So you know, there’s a real valid legal question about consolidation here. Did I take the lot out of the plat by consolidating with a parcel? Or did I bring the parcel in? Now, because the association inside the plat has no governance capability over the dirt outside the plat, the better argument is likely to be that the lot was actually pulled out of the plat and removed from it. And so you shut off the water, you can’t use the roads, you’re not responsible for anything. And frankly, good luck getting to your consolidated parcel, because you may not be able to use the roads if they were dedicated as private roads. How do you get to that newly consolidated plat? If the roads in the plat were not dedicated to the general public, then they are private roads. If they’re private roads, that means that you don’t get a gate key anymore or the gate code that lets you enter the plat. You don’t get any water from the association.
Benefits are you’re not responsible for the roads, you’re not responsible for the water, you’re not responsible for any, any community septic that may be on on one or more lots. But the fact is that, by consolidating, you may be land-locking your newly consolidated law. And so every single situation is going to be different. We don’t want to say that this is the only end result of a consolidated lot under the lot-plus-parcel consolidation circumstance, but we also don’t want to say parcels can just come in and take water and all that type of thing. You could take a 50-acre parcel and attach it to one of our old 50-by -00 lots and suddenly the association is responsible to serving all those little trailers that you put up there, and all your buddies come up on the Fourth of July, and, boy, it can just be a nightmare. We’ve seen that.
So when we talk about lot consolidation, we need to be careful of what we’re doing. And frankly, we need to be careful what we’re doing before we buy. Now, if anybody’s involved in the purchase or sale of dirt, or frankly the use of it, they need to be a long term planner. I mean, what we all know is life has its way with you. People get hit by a bus. People get injured. People lose their jobs. Kids die. Parents die. Things happen. But the land remains. If you buy land, and then you are thinking about consolidating a lot, there are several possibilities that may turn a lot consolidation that appears simple into a legal tangle and a nightmare. This is nest avoided by good planning, so just be a good planner. That’s what we really advocate, and that’s what a good lot consolidator will do. They’ll plan ahead. Thanks for listening.
This episode is sponsored by time a contract. buying real estate is the most complex and important financial transaction in most people’s lives. It’s estimated that over 60% of American wealth resides in the family home. For small to medium sized business, a commercial building may be the biggest asset on the company balance sheet is so much on the line. Don’t make a mistake on the buy. Know what you’re buying before you sign. If you have signed, find out exactly what you signed and what your options.
At Timely Contract, our primary legal services include: real estate contract review, real estate contract drafting, legal opinions for title insurance exceptions, and research, due diligence, and legal opinions for properties.
At Timely Contract we have local real estate attorneys who have experience throughout Idaho, including: Boise, Post Falls, Coeur d’Alene, Lewiston, Moscow, and Sandpoint.
We also have local real estate attorneys who have experience throughout Montana, including: Missoula, Billings, Bozeman, and Kalispell.
And we have local real estate attorneys who have experience throughout Washington, including: Spokane, Spokane Valley, Liberty Lake, Medical Lake, and Cheney.
Disclaimer: Timely Contract podcasts are meant to be informative; however, Timely Contract podcasts are not legal advice. Legal advice is the result of the application of proper law to a particular set of circumstances. Whether or how the law applies to a particular factual situation is a legal question that cannot be answered by a Timely Contract podcast. In addition, Timely Contract podcasts sometimes differ from their written transcript. Listeners and readers should not rely on a Timely Contract podcast, or a transcript of a Timely Contract podcast, as legal advice. Listeners should seek legal counsel and get a true legal opinion before taking actions regarding real property.