Much Ado About Subdivision: Building on a Subdivided Lot When the Locality Never Approved the Subdivision Plat

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Pop quiz: You want to purchase an undeveloped lot with the hopes of building your home on it. You hire a title company to perform the title work, which appears to come back clean. You are told your lot used to be part of a bigger parcel, but it was subdivided a few years ago, and your neighbors own the other lot. You even take a look at the subdivision plat to see where the boundaries are located. In the end, you buy the property and receive a deed with a metes and bounds description of the property’s boundaries. Then you apply for the permits to build your home. However, the local zoning office says you cannot build on the lot, because the locality never approved that pesky subdivision plat. Confused by this revelation, you wonder what do you own and what can you do with it?

What Do You Own?

To answer the first question: what does the deed say you own? In this example, the property you purchased is defined by metes and bounds (i.e. a description of the property’s boundaries by identifiable markers and coordinates). According to the recent Virginia Supreme Court case of Nejati v. Stageberg, a metes and bounds description will likely create separate, legally distinct parcels of real property. So, in the example above, you own a definite and separate lot from your neighbor. Without that description (or a similar way to identify the property’s boundaries), Virginia law tends to view this conveyance as creating a tenancy in common, meaning you and your neighbor each have ownership rights to the property, leading to specific consequences for how you can use or dispose of it.

What Can You Do With It?

While the Virginia Supreme Court in Nejati said the failure to properly subdivide a parcel does not affect the transfer of title, they also said the property cannot be developed until it is properly subdivided according to local subdivision laws. This stems from Virginia code section 15.2-2254, which states both that (a) a locality must approve subdivision plats and (b) no one may sell or transfer a “subdivided” lot before the locality approves the subdivision plat. Therefore, the failure to get the locality’s approval, while it does not prevent the transfer of title, will likely preclude a purchaser from using it the way they would like – whether to build a home, a shopping center, or whatever else might be allowed under the local zoning ordinance.

Conclusion

The lesson from Nejati is that the devil is in the details. As always, local rules matter greatly when using real estate, and it is critical that developers and purchasers understand and adhere to their localities’ subdivision rules.