A ROADMAP THROUGH THE MINEFIELDS OF THE LAND DIVISION ACT(1)

Vance A. Fisher (2)
Fisher Law Office
Law & Title Building
811 Ship St., P. O. Box 83
St. Joseph, Michigan 49085
fisherv@fisherlaw.com
www.fisherlaw.com
616-983-5511
Copyright 1998 Vance A. Fisher
All rights reserved

Portions copyright 1999 Michigan Lawyers Weekly

1. Background

Michigan's legislature assumes a policy to protect buyers of interests in land against sellers (although most sellers become buyers, and vice versa). Examples of legislative enactments evidencing this policy include the Seller Disclosure Act, MCL §§565.951, et seq.; the Land Sales Act, MCL §§ 565.801, et seq.; the old "Plat Act," officially known as the Subdivision Control Act, MCL §§ 560.101, et seq.; and the Condominium Act , MCL §§559.101, et seq. The objective seems to be to facilitate the realization of purchasers' reasonable expectations.

Another policy that converges with these protections is that land development should proceed in an orderly manner, under the control of the appropriate local governmental unit. A master zoning plan is required by the Township Zoning Act. §125.273. The plan must be appropriately considered on a number of fronts: It must be

"designed to promote the public health, safety, and general welfare; to encourage the use of lands in accordance with their character and adaptability, and to limit the improper use of land; to conserve natural resources and energy; to meet the needs of the state's residents for food, fiber, and other natural resources, places of residence, recreation, industry, trade, service, and other uses of land; to insure that uses of the land shall be situated in appropriate locations and relationships; to avoid the overcrowding of population; to provide adequate light and air; to lessen congestion on the public roads and streets; to reduce hazards to life and property; to facilitate adequate provision for a system of transportation, sewage disposal, safe and adequate water supply, education, recreation, and other public requirements; and to conserve the expenditure of funds for public improvements and services to conform with the most advantageous uses of land, resources, and properties. The zoning ordinance shall be made with reasonable consideration, among other things, to the character of each district; its peculiar suitability for particular uses; the conservation of property values and natural resources; and the general and appropriate trend and character of land, building, and population development."

This concept is elaborated in the old Plat Act, now found in § 560.105 of the Land Division Act:, which requires compliance with that Act, any municipal ordinance promulgated thereunder, any rules of the drain commissioner, of the road commission, or of the county plat board; the rules of the state transportation department, the rules of the department of consumer and industry services, and the rules of the department of environmental quality, and is not significantly different in that regard from the old plat act. The objective seems to be to regulate land use layout.

A third Michigan policy is that density, in and of itself, must be controlled. The old plat act and the land division act regulate lot size, as do typical zoning ordinances, and as does the township zoning act. Thus the underlying assumption is that, absence some exemption, residential parcels should be platted, and that plats should be regulated by local governing bodies.

2. The Prior Statute

Under the old Plat Act, plats were required by §103 if there was a "subdivision." And "subdivision" was, in turn, defined in §102(d) as the division of land into 5 or more parcels each of which is 10 acres or less within 10 years. §264 provided that failure to record a plat prior to sale, unless exempted, was a criminal offense, and (§267) that purchasers could rescind the transaction. Put another way, under the old law, unlimited 10 acre parcels were permitted; no more than 5 smaller parcels were permitted, and the "look-back" period was 10 years.

Thus, the predecessor statute imposed size constraints, and time limitations. The longer one waited, the more divisions could occur. However, it often was a race of diligence among grantees from an original proprietor that determined who could split what, as for example a conveyance of three 9-acre parcels on July 1, 1981, followed by a division of one of them by the grantee into 2 parcels on July 2, 1981, would preclude the other 2 grantees from making any divisions until July 1, 1991, unless a formal plat was prepared and approved.

3. The New Land Division Act's Underlying Concerns

The Land Division Act, like the predecessor plat act, continues to regulate lot size along a time line, and now regulates shape as well.. It has been the source of considerable writing and considerable confusion. But it may help to keep in mind that what is intended to be accomplished is (1) forcing plats to be created where appropriate; (2) prohibiting plat-like arrays of parcels that are not regulated as plats; (3) defining what is not a plat-requiring array, and (4) imposing a time-line requirement on future divisions. It also imposes some length/width ratios, establishes a mechanism for the conveyance of rights to split, and incidentally mandates certain language in deeds of unplatted land concerning likely environmental conditions.

4. When a Plat Is Not Required Under the New Statute; the Basic "Splits"

The new statute provides in Sections 102 and 103 for 3 kinds of events: "divisions", "exempt splits," and "subdivisions."

"Exempt splits" are defined as splits not resulting in 1 or more parcels of less than 40 acres. (§102(e).) That is, if after the cutting up of the original parcel, every piece is 40 acres or more, the "split" is "exempt." Exempt splits do not require any municipal approvals (so long as the parcels are accessible) (§103(1)).

The "exempt split" concept is analogous to the old 10 acre rule. Under the old law, one could have as many 10-acre parcels as one wanted. Now, the only unlimited division is into 40-acre parcels, of which one can create as many as desired.

"Division" is defined as a split such that 1 or more parcels of less than 40 acres results . (§102(d)). That is, if after the cutting up of the tract or parcel, there is one piece of less than 40 acres, there is a "division." Although "divisions" require no platting, they must still comply with Sections 108 and 109, discussed below. . (§103(1)). This "division," somewhere between the "exempt" and the "subdivision", is a new category created for the first time by the new act.

"Subdivisions" are splits which, if they met sections 108 and 109 would be "Divisions", but which do not in fact meet those provisions. (§102(d, f).) In other words, if it isn't exempt, and if it's not a §108 "division", it's a "subdivision", and must be platted.

Section 108 provides what "divisions" are lawful. Section 109 provides what additional requirements are imposed on otherwise lawful divisions.

Thus, the heart of the statute's new provisions is in Sections 108, as enhanced by §109.

5. The New Concept of Parent Parcels

"Parent parcels" are defined as a parcels or tracts lawfully in existence on March 31, 1967. §102(i). This date is the touchstone of the timeline. March 31, 1997 is the "ground zero" of the new act, from which everything else follows.

And whereas the old statute in that the old act gave everyone a fresh start every ten years, the new statute gives some additional rights, but no complete restart, after ten years, as discussed below.

6. A Flow Chart for Section 108

The act is of sufficient complexity that any analysis is apt to overgeneralize, and interpretations may differ. The following is suggested as a point of departure, for analysis of a particular transaction. The specifics are found in Sections 108 and 109.

I. For divisions of parent parcels (i.e., those in existence on March 31, 1997) (and remember, prior divisions subsequent to that date are counted) the following limits the number of parcels that may result:

A. If all resulting parcels at least 40 acres and accessible, the statute is satisfied.

B. If any parcel is less than 40 acres, the following must be satisfied, subject to "C" and "D" below:

1. Is the parent parcel 10 acres or less?

a. If so, 4 parcels may be created, unless, under local ordinance, any parcel is too small, or has the wrong shape.

b. If not, go on below.

2. Is the parent parcel more than 10 acres but not greater than 120 acres?

a. If so, divide the acreage by 10.

i. How many whole parcels and fractional parcels result?

ii. That number, plus 3, is the allowable number of parcels, unless, under local ordinance, any parcel is too small, or has the wrong shape.

3. Is the parent parcel over 120 acres?

a. If so, 12 parcels are allowed for the first 120 acres.

b. If so, 1 parcel is allowed for each whole 40 acres over 120.

c. Unless, under local ordinance, any parcel is too small or has the wrong shape.

C. Parcels of 40 acres or more do not count.

D. Additional ("bonus") parcels are added under certain circumstances:

  1. If the parent tract is at least 20 acres, and
  2. If no new driveway accesses to an existing public road result; and
  3. One of the resulting parcels is at least 60% of the size of the parent parcel.

II. Resulting parcels, whether by exempt split or by division, may be further divided as specified in the act, but not until 10 years after the recordation of the split or division, provided that not more than 2 parcels for the first 10 acres or fraction thereof, plus 1 for each whole 10 acres in excess of the first 10, result, and further that not more than 7 parcels result (10, if one is more than 60% of the area of the parcel or tract being partitioned or split), result.

7. The Depth-to-Width Requirements of Sections 109

Any Section 108 "Divisions" are also required to be approved by the municipality. Municipal ordinances are enabled. Access, utilities, and depth-to-width ratios are regulated Provisions for assignment of division rights are made. Notices as to division rights in deeds, and as to their assignment, are provided for.

Specifically, if there is a "division", no parcel can have a depth of no more than 4 times the width, or such smaller ratio as an ordinance may specify, or such larger ratio as an ordinance may authorize in special circumstances. §109(b).

The depth-to-width requirement seems to make sense with rather small parcels, but seems to make no sense in the case of large ones. A division of a 160-acre parcel into 5 30-acre parcels and a 10-acre parcel, however, is also covered. Remember, however, that if all parcels are 40 acres or more, there is no "division."

8. The Mandatory Deed Language of Section 109

"This property may be located within the vicinity of farm land or a farm operation. Generally accepted agricultural and management practices which may generate noise, dust, odors, and other associated conditions may be used and are protected by the Michigan right to farm act.". The foregoing language is mandated in every "deed after the effective date of" the act, if the land is unplatted. §109(4).

It seems superfluous to require such a statement in any real estate transaction, as the conditions generated by farming activities should be obvious to all. The phrases seem unlikely to be noticed in the deed, which is usually not studied by a purchaser at a closing.

And even if noticed by a purchaser at the closing, the language would have limited effect, unless the contract between the parties gave relief under those circumstances, or unless the purchaser could support the unlikely charge of fraudulent concealment of these obvious conditions, as the statute does not give effect to the language, but merely requires its presence in that unhelpful spot.

The statute does not specify where in the deed the language should appear, nor does it take a position as to whether the buyer or seller is responsible for seeing that it is there, nor does it explain what effect, if any, the omission of the language would have.

The phrase is simply mandated to be contained in the deed.

9. Conveyance of the Right to Split

Section 109 provides for the transfer of splitting rights, but "only from a parent parcel or parent tract to a parcel created from that parent parcel or parent tract." §109(2). And a "person shall not sell a parcel of unplatted land" unless the deed contains 2 things: (1) a statement as to whether the right to make further divisions not requiring a plat, are intended to be conveyed; and (2) how many splits are permitted the grantee. If no statement appears, the right to make divisions stays with the remainder retained by the grantor.

The specific language required is as follows:

"The grantor grants to the grantee the right to make [insert number] division(s) under section 108 of the land division act, Act No. 288 of the Public Acts of 1967."

In the absence of a statement conforming to the requirements of this subsection, the right to make divisions under section 108(2), (3), and (4) stays with the remainder of the parent tract or parent parcel retained by the grantor." §109(3)

10. The Continuing "In Terroram" provisions of §§264 and 267

Sections 264 and 267 continue to provide criminal sanctions, and enable rescission by purchasers, if there are violations of the act. Selling unplatted land requiring a plat is a misdemeanor. Making unpermitted divisions, violating the depth/width ratios, failing to put the required language in deeds (whoever may have that duty), all are subject to "civil fine" of up to $1000 per parcel.

And any land sale cut up in violation of the act is "voidable at the option of the purchaser." Further, the seller forfeits all consideration and is liable to the purchaser for damages. §§264, 267.

(1) MCL §§ 560.101, et seq.

(2) Vance A. Fisher is a lawyer in St. Joseph, Michigan, concentrating his practice in estate planning and administration.