Covenants In Lieu Of Unity Of Title; A Flexible Vehicle To Address Phased And Multi-Purposed Developments

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For years, governmental agencies have wrestled with the concept of how to best regulate and control multi-phased and/or mixed-use developments which may result in multiple ownerships.

Traditionally, local governments have utilized a Unity of Title to insure against multi-ownerships and possible lack of adherence to an approved plan. This process has presented several challenges to the development community such as:

  1. A developer is precluded from selling off and even financing separate components of the project;
  2. Being able to secure separate financing for different components of a project, subject to a Unity of Title, may result in the lender being precluded from foreclosing on a specific portion of the land. This has led to lenders asking developers to secure their loans with the entire tract of land.

During the latter part of the 1970's, several local governments (most notably Miami-Dade County, see Sec. 33-257, Code of Miami-Dade County), determined that a different regulatory scheme was necessary. The governmental entities desired to protect the zoning integrity of the overall site plan, but needed to relax the ability of a developer to finance and bring in new development partners to develop complex development projects.

The procedure to accomplish this goal is commonly referred to as a “Covenant in Lieu of Unity of Title (“CIL”). The CIL requires that:

  1. The property will be developed in substantial accordance with an approved site plan for the overall development;
  2. The subject property may be developed in phases which must be consistent with the overall site plan;
  3. The CIL must be recorded in the public records and run with the land and shall be binding on all successors and assigns;
  4. Prior to any sale of a portion of the tract subject to the CIL, an Easement and Operating Agreement must be recorded which maintains the integrity of the approved site plan;
  5. The CIL can only be amended by approval of the municipal attorney, usually following a public hearing.

The CIL has been successfully utilized for over 30 years and has achieved its intended goal of fully recognizing the zoning site plan of a parcel of land and permitting additional financing options (sale, mortgaging, grants, etc.) which would have run afoul of the terms of a Unity of Title.

Topics:  Land Developers, Municipalities, Property Ownership, Real Estate Development, Real Estate Market

Published In: Commercial Real Estate Updates, Residential Real Estate Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bilzin Sumberg - Homebuilders | Attorney Advertising

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