When 2 Minus 1 Still Equals 2: Combining Lots in a Planned Community

"I will just combine my two lots into one, then I only have to pay one assessment but I'll still have two votes."

REALLY? – NOT SO FAST!

Owners of adjoining lots in subdivisions often decide to combine them for a variety of reasons.  But, in a planned community governed by an owners' association, the owner may have to obtain consent and the effect the combination of lots may not be exactly what the owner thought it would be.

While there are typically other governmental ordinances that govern subdividing lots, and combination or recombination of separate lots, the North Carolina Planned Community Act has no provisions addressing this issue.  So, in addition to complying with those governmental regulations, the owner will have to review the community association governing documents, including, but not limited to, the declaration, restrictions, subdivision maps, and bylaws (collectively, "Governing Documents") to determine whether or not the owners' association has any authority over his desire to combine his lots, and the effect of any permitted and resulting combination.

Association Authority to Approve/Deny Lot Combinations

The association's authority to govern or prescribe the manner in which lots can be combined within the community lies solely within the Governing Documents.   If the Governing Documents are silent on that issue or ambiguous, the association most likely does not have the authority to approve or deny the combining of lots.  If the association does have authority on the issue, there may be additional provisions within the Governing Documents describing the manner in which the combined lots will be treated for purposes of assessments, voting, and, perhaps, other specific issues. 

One Lot or Two?

Assessments

The general rule regarding combining lots in planned communities is that the combined lots will continue to be treated as the original pre-combined number of lots unless the Governing Documents provide otherwise.  In other words, multiple combined lots do not automatically become one lot for purposes of levying assessments.  The North Carolina Court of Appeals has decided that it would be inequitable to the owners of other lots within the community who are subject to the Governing Documents if a lot owner could reduce his assessment obligations simply by combining lots.  That does not mean that lots cannot be combined, but it does mean that the combined lots will continue to be treated as two lots when it comes to levying assessments.

Voting

Again, one must review the Governing Documents to determine whether the combined lot will continue to be treated as two lots for purposes of voting or one lot.  Votes are typically assigned to each individual, separate lot.   So, unless the Governing Documents provide to the contrary, the owner of the new resultant combined lot will still be entitled to cast the number of votes assigned to the original two lots (or any number of lots) so owned. 

Other Issues

The Governing Documents for the community usually contain provisions establishing easements along interior lot lines for the installation of utilities, drainage and other purposes.  Those easements are for the benefit of the surrounding lots and properties, and placing improvements within the easement areas may interfere with the purposes and functions for which those easements are reserved, and thus may be prohibited.  The same could be said for setback lines shown on the subdivision maps as well as those established by the Governing Documents.

The Governing Documents for older planned communities may not address the combination of lots at all.  However, it is possible that the members of the association may amend the Governing Documents to allow owners to combine lots.  In doing so, it is important that the authority to approve or deny be clearly delineated and the entity for making that determination (i.e., the board of directors of the association or the architectural committee) be designated---all in addition to addressing in the amendment assessments and voting allocations, together with other matters unique to the particular planned community.

So, 2 minus 1 may equal 2 and, at the same time, it may equal 1!

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© 2020 Ward and Smith, P.A. For further information regarding the issues described above, please contact Adam M. Beaudoin or Justin M. Lewis.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.

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