Reviewing the relevant zoning map is a vital component of due diligence on a prospective property purchase or development. For the unwary, though, this review can result in costly oversights, as it can lead the unsuspecting to believe that the subject property is a legal lot or a lot of record (note that both terms mean the same thing). Zoning maps, however, often simply depict the existence of tax lots, whereas approval of a particular land use application may require the existence of a legal lot.
Tax lots may include more or less land than the underlying legal lots. In fact, tax lot lines "are but lines of convenience for owners and assessor's office use" in administering property taxes. Resseger v. Clackamas County, 7 Or LUBA 152, 158 (1983). The creation and conveyance of a separate tax lot by a sale does not necessarily create a legal lot. To legally subdivide or partition a property, the owner must apply for and secure approval from the local government.
Although savvy developers understand that local government approval is required to divide property, the absence of a legal lot can be an unseen issue. Indeed, when conducting due diligence on a property, it may not be apparent that the property was divided and sold in violation of local land division standards. Title reports, which focus on the ownership of the property, will not identify this issue. Unless a careful review of a property's land use history is completed, prospective purchasers can unwittingly purchase undevelopable land, i.e., an illegal lot.
The Oregon legislature recently created two ways to validate illegal lots sold before January 1, 2007. First, the lot can be validated if it could have complied with the applicable partition or subdivision criteria for the creation of legal lots in effect when the lot was first sold. Second, a local government can validate an illegal lot if it issued a land use permit for the construction of a building on the lot after it was first sold. If it is validated, the owner must then record a partition plat within 90 days to make the lot legal.
Before purchasing property or filing a land use application, one should determine whether the subject property is a legal lot and, if it is not, whether the validation process described above is available. Although determining the existence of a legal lot is an initial step in the development process, it is a step that can help prospective purchasers identify and avoid issues related to illegal lots.