Six lots to four to zero: a 1978 restriction I read too late

The part that gets people is that zoning and private restrictions are two separate locks on the same gate. The county can bless a five acre split all day and a 1978 declaration still binds you, because it's a contract running with the land that the county isn't a party to and won't enforce or waive.

My standing rule: schedule B is a table of contents, not information. I order every recorded instrument listed, and I read the deed chain back to the split that created the parcel, because that's where restrictions get born. Old family splits are the worst offenders. Somebody sold off five tracts in the 70s and wrote a minimum acreage in to keep the view.

Some states have marketable title acts or statutory periods that can extinguish stale restrictions unless they're re-recorded, and some don't, and how it applies to your particular declaration is an attorney question in your state. I've had one where it worked and one where the attorney told me not to bother. So I don't underwrite on that hope anymore.

$77k for that lesson is expensive but not the worst version. The worst version is closing, spending $200k on a road, and finding out at plat recording.

Two questions before I copy your checklist wrong. When you say written zoning verification letter, is that a standard thing counties issue, or did you have to ask for something custom? And does the letter actually protect you if the planner is mistaken, or is it just evidence that you asked?

How did the title company treat it once you found the declaration? Did they offer to insure over it, or was it excepted and that's that? I've been told exceptions are just exceptions and I want to know if there's ever a negotiation there.

I got about four days from this exact thing last spring. Different county, same shape: a 1980s split with an 11 acre minimum buried in a declaration. My attorney found it because he actually pulled documents, and my earnest money hadn't gone hard yet. I've thought about that timing more than once since.

The difference between your outcome and mine was three business days of luck, honestly, so I'm not going to pretend it was skill.

The number that decides whether this was a $77k mistake or a $10k mistake is the point at which your deposit became non-refundable. Everything else in the post follows from that.

On the mechanism: a subdivision plan has to clear two independent tests. Public regulation, which is zoning plus the local subdivision ordinance and any infrastructure triggers tied to lot count, and private title encumbrances, which are recorded restrictions, easements, and reservations that bind by contract regardless of what the county permits. Passing one tells you nothing about the other. Schedule B of a title commitment names the private encumbrances by recording reference. It does not summarize what they say. Ordering the underlying instruments is the step that closes that gap, and it's usually a small cost through the title company or the county recorder.

Whether an old restriction can still be enforced turns on state statute and case law, and that determination requires a licensed attorney in the state where the land sits.

On the underwriting side, the reason this loss got large is that the bulk-to-retail spread you bought was entirely contingent on lot count. Six lots at $95k against a $432k basis works. Two lots at 20 acres each returns you to bulk pricing, which is roughly what you paid. A subdivision underwrite is more durable when you can name the lot count that still clears your basis with no profit, and then check the encumbrances against that floor before the deposit hardens. If the floor count is two, the deal only ever had one outcome.

The carry structure also mattered. Interest-only debt on a no-income parcel converts delay directly into loss at a fixed monthly rate, so any deal where approvals are unresolved should be underwritten against a carry period longer than the one you expect.

Dumb question that I'd have kept to myself in a room: if the neighbors are the only people who can enforce it, what happens if you just record the plat and sell the lots? I assume something bad, I just don't know the shape of the bad.

I've bought into two of these declarations on purpose. Both had an amendment clause, one needed 75% of the original tracts by count to sign a release and the other had a 40 year term with automatic renewals unless a majority objected. So the document sometimes has its own exit written into it. Read the whole thing, including the boring last page, because that's where the term and amendment language usually sits.

Didn't help you here with two hard nos out of five, though. That math never gets to 75%.

Genuine question from the sidelines, since I'm looking for something that pays while I wait. Is there any version of a subdivide play where the land earns during the hold? Trellis was paying $2,400 a month for eleven months to own dirt and that's the part that scares me off.

Can someone define minor plat for me? I've read it three times in this thread and I've gathered it's the faster county process, but faster than what, and is the cutoff always lot count?

In the rural counties I look at, 20 acre minimums aren't unusual as actual zoning, let alone as a private restriction, and the local buyer pool for a 20 acre tract is about six people a year. Your $404k exit at eleven months in that situation would have been a two year exit for me. Selling the whole thing to a horse buyer that fast was the one part of this that went right.

Every unit I own has taught me something and the lesson is usually about time. $27k of interest for eleven months on a plan that died in month one is the part I'd stare at. On my buildings, a stalled project still collects rent, so delay is annoying. On raw land delay is just subtraction. I don't think I'd sleep well with that structure.

So who actually enforces these, practically? Do the neighbors have to sue, or does the recorder refuse the plat because the restriction is in the chain? I keep imagining the county clerk as a gatekeeper and I suspect that's wrong.

My surveyor flagged something like this for a client last year before the title work came back, purely because he was pulling the old plats and saw the note on the face of the 1970s plat. Restrictions sometimes appear right on the plat drawing. Worth asking your surveyor to send you every recorded plat in the chain early, it's cheap and they're already looking.

I'll push back on where the loss came from. The restriction ended the plan, sure. What turned an ended plan into $77k was $324k of interest-only debt on an asset producing nothing, plus a $28k haircut on the resale. If you'd bought that 46 acres with cash and hit the same wall, you'd have taken $22k of dead soft costs and a $28k price loss and walked with your ability to buy again intact.

So I read the real failure as sizing the debt to the plan you hoped for instead of the two lot floor the title could support. The document reading is the fix, obviously, and it's a cheap one. The leverage is what set the price of being wrong.

Honestly, you actually dodged something. Six lots off existing frontage with no new road is the cheap version. Once a county makes you cut a road, you're into design, bonding, and inspection, and the number goes from your $34k of soft costs to six figures fast. I've watched a seven lot layout eat $180k of improvements before a single lot closed. Finding your wall at $22k spent is the good version of a bad outcome.

I'm writing down the boring parts of this so I don't have to learn them at your price. Order every schedule B document before the deposit hardens. Get a written zoning verification naming the minimum lot size and the process for my lot count. Underwrite the lot count that just barely covers basis and check the encumbrances against that. Assume carry runs longer than planned.

That's four lines and about $600 of cost. Thanks for putting the actual invoice in the post, most people leave that out.