New Options Under The LDA

July 22, 2007
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Ten years ago, the state Legislature limited the rights of Michigan property owners and real estate developers to divide real property.

In an effort to combat urban sprawl, the legislature restricted the number of times an unplatted parcel could be divided. At the same time, though, legislators gave developers another tool in re-division that could be used after other options were exhausted. They also set a clock on the process, preventing property owners from utilizing the new re-division procedure for at least a decade.

For some parcels, that waiting period ended March 31, which means that we may start to see property being subdivided under the “re-division” rules established in the Land Division Act. The LDA revised Michigan’s Subdivision Control Act, which allowed unplatted tracts to be divided into no more than four new parcels of 10 acres or less every 10 years. Property owners, looking to maximize the number of parcels with road frontage, responded by creating narrow strips of land. After years under this system, the legislature determined this was not the most efficient way to divide land.

Enter the Land Division Act. Unlike its predecessor, the LDA limits the overall development of unplatted property by limiting the absolute number of times it may be divided. The size of each parent tract determines how many times it may be divided. For example, if a parent tract is 20 acres or less, it may be divided into four parcels. Parent tracts of 240 acres or more may be divided into 18 parcels with the potential for two additional parcels. Tracts between 20 and 240 acres have similar parameters.

While specifics are generally up to the landowner, the LDA does require that each parcel meet certain access, utility and depth-to-width requirements. Local zoning laws and private covenants also may limit divisions. For instance, if you owned a parent parcel of 20 acres on March 31, 1997, the effective date of the LDA, you would be eligible under the LDA to divide the tract into four parcels. If the first division bisects the property, you have created two parcels. You could then assign the remaining two division rights between the two resulting parcels. Once a parent tract and its resulting parcels run out of divisions, all of the property of the original parent tract cannot be further divided under the LDA, except through re-division.

The LDA established three criteria for re-division: 1) At least 10 years must have passed since the parcel was created and recorded; 2) The re-division cannot result in more than a specified number of additional parcels (one re-division for the first 10 acres, with one additional re-division for each additional 10 full acres, with a cap of either seven or 10 re-divisions); 3) The parcels created under re-division must satisfy the accessibility, utility, depth-to-width and other requirements of the LDA.

Let’s look at another example. If you own a 20-acre parent parcel and have divided it into four parcels, you may, after the requisite 10 years, be able to re-divide the resulting parcels under the LDA. Since it was enacted March 31, 1997, the first possible date a 10-year waiting period under the LDA could have expired was March 31, 2007.

We anticipate that re-division may become a popular option for property owners who have used their division rights but do not wish to take the time or incur the expense of platting their property.

Jim Rabaut is a partner at Warner Norcross & Judd LLP. He chairs the firm’s Real Estate Services Group.

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