Illegally Created Lots of Record

July 30th, 2012 - Carmichael Clark

Generally, a parcel of land is considered an illegally created lot when there is a sale, lease or transfer of land in violation of the state subdivision requirements. Owning an illegally created lot can lead to road blocks when it is time to develop the property. In certain jurisdictions building permits and other development permits may not be issued for an illegally created lot.  However, an owner may acquire permits if they can demonstrate that they were an “innocent purchaser without actual notice” that the lot was illegally created. An innocent purchaser is one who had no knowledge that the lot was illegally created. Demonstrating innocent purchaser status can be cumbersome.

Innocent purchasers do have statutory remedies for their predicament. If the owner is an innocent purchaser, the owner may recover damages from whoever sold or transferred the land which violated the state subdivision statute. Such damages may include the amount spent trying to get a development permit, the amount spent to conform to the subdivision statute as well as the cost of investigation, suit and reasonable attorney’s fees. In the alternative, the owner may also choose to rescind the sale and collect similar costs and fees.

Title companies often do not insure that the property you are purchasing is a legal lot of record. One may avoid the headache of an illegally created lot by doing some homework before purchasing property. For instance, an obvious red flag is a parcel of land that is smaller than the minimum parcel size within a particular zone which is not part of a plat. Often these smaller parcels were illegally created.

Thankfully, a deed which transfers fee title of the illegally created lot may still be enforceable.  That is, the fact that the lot was illegally created does not mean that transfer of title did not occur. So, if one purchases an illegally created lot and has no plans to develop the property, then the fact that the lot is created illegally may have no bearing on their plans and they may still sell the land.


Simi Jain, Attorney

Disclaimer: This article and blog are intended to inform the reader of general legal principles applicable to the subject area. They are not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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