Lot Mergers and Unmergers

C. Christine Fillmore, NHMA Staff Attorney

All but a handful of New Hampshire municipalities have a zoning ordinance in place. Many of those ordinances address minimum lot sizes, and in the past have gone further than that in regulating lots by providing for the merger of substandard lots. Mergers are a frequent area of confusion for property owners as well as Planning Boards and Zoning Boards of Adjustment. In this issue’s Legal Q&A, we will look at how this issue arises and how it has changed over the years.

Q: I’ve heard about lots that were too small to build on, but what does that have to do with mergers?

A: Lot mergers are one way an owner can use the property more easily. If a lot was of legal size when it was created but would now be too small to build on under current municipal zoning, the owner would likely need a variance to build on it. Some zoning ordinances have a “saving clause” permitting owners of pre-existing nonconforming lots to build one residential structure without a variance, but not all municipalities have such a clause. Merging two or more of these smaller lots is a way to create one larger lot that meets the current minimum size requirements and avoids the need for a variance. It can also help the structure conform to minimum setbacks, septic, and well requirements without a variance.

Q: How does an owner merge adjoining lots?

A: Under RSA 674:39-a, any owner of two or more contiguous (i.e., adjoining) lots may merge them into one lot by applying to the planning board. Unless the merger would result in a lot that violates the ordinances and regulations in effect at the time of the merger request, the planning board must approve the application. This is one of the very few times that a planning board action does not require a public hearing or notice. No new survey or map needs to be recorded in the registry of deeds, but the planning board does need to sign a notice of the merger and have that notice recorded. The notice must include enough information to identify the lots which have been merged.

The idea behind this law is that there are many small lots which were created long before zoning ordinances were enacted but which are now too small to meet minimum lot sizes. The owners of two or more contiguous lots may wish to have them merged so they can build something larger on a larger lot, or build on the combined lots without having to obtain a variance for violations of the size, setback, septic and other local requirements. Mergers are also a positive thing in the eyes of most communities because they can help reduce the number of undersized lots and thus reduce the density of development.

Q: What is the problem if the owners can simply ask for lots to be merged?

A: Historically, mergers have also occurred without a request from the owners. Many local zoning ordinances have included an “involuntary merger” provision (also known as “administrative merger”) which kicked in automatically if an owner wanted to build on one substandard lot but also owned an adjoining lot. It was usually attached to a saving clause (described above) and required that, if the substandard lot was contiguous to another lot owned by the same owner, the lots would be considered merged for all purposes.

Q: How would the owner know the lots had been merged?

A: For the most part, municipalities did not periodically go through their land records to see whether any contiguous lots had come into common ownership. Action on an involuntary merger generally happened when an owner applied for a building permit and was informed that their contiguous lots had been automatically merged under the zoning ordinance. Sometimes that information was shared with the tax collector and assessors so the tax map could be changed, sometimes not. It created a lot of confusion for everyone.

Most often, the merger was brought to light when an owner had multiple substandard lots, one of which already had a house on it, and then applied for a building permit to construct a home on another one. It would come as an unwelcome surprise when the owner was informed that the other lots could not be built upon because they no longer existed as separate lots. Once an involuntary merger had occurred, the owner had to apply for subdivision approval to separate them again. RSA 674:39-a. As you may imagine, it was often very difficult to get approval to subdivide property back into lots that would not meet current minimum lot sizes. This left many unhappy owners holding one larger lot instead of separate house lots which could each be built upon. Particularly in waterfront areas, this had the effect of reducing the potential value of the land because it could not be used to build any more homes.

Q: Even if owners are unhappy with this situation, why does it matter? Our zoning ordinance imposes plenty of limits that some owners don’t like.

A: Until recently, there was no indication in the law or court cases that involuntary merger provisions were problematic. They have existed for decades and had been enforced without legal difficulty. However, the law changed in 2010 and 2011 in very significant ways.

Q: What is the law now?

A: In short, involuntary mergers are no longer legally enforceable, and owners whose lots have been involuntarily merged have an opportunity to restore the former lot lines.

The first change occurred in 2010, when RSA 674:39-a was amended to add the following sentence: “No city, town, county or village district may merge preexisting subdivided lots or parcels except upon the consent of the owner.” It became effective on September 18, 2010. In other words, no involuntary merger provision may be legally added to a zoning ordinance now, and those in existence were no longer enforceable after the effective date of the law.

The other change occurred in 2011, when a new section of the law was added. Effective as of July 24, 2011, the new RSA 674:39-aa provides an opportunity for owners to reverse an involuntary merger. If two or more lots were involuntarily merged before September 18, 2011, the owner may request that the municipality unmerge them to restore the prior lot lines. RSA 674:33-aa, II. The request must be submitted to the governing body (rather than the planning board), and if the merger was involuntary, the selectmen must grant the request. At that point, all zoning and tax maps must be updated to show the individual lots. If the unmerged lots are undersized or otherwise don’t conform to the now-current zoning ordinance, they are still considered preexisting nonconforming lots.

The opportunity to unmerge lots has two limits, however. First, there is a time limit. A request for unmerger must be submitted to the governing body before December 31, 2016. RSA 674:33-aa, II(a).

Second, unmerger is not available if the owner (or prior owner) voluntarily merged the lots. RSA 674:33-aa, II(b). There are two ways this could have happened. Lots may have been merged at the owners’ request under RSA 674:39-a, or they could have become merged under the “merger by conduct” doctrine (described below). If either of those situations applies, the governing body may refuse to unmerge the lots. However, the governing body should be aware that if they claim the lots were merged by the conduct of the owner, the municipality will be required to prove that is the case.

Q: Do towns and cities have to follow this law? Don’t they have the power to regulate development as they see fit?

A: It is true that state law clearly authorizes towns and cities to regulate land use through zoning. RSA 674:19. However, every town and city has to follow this law because it overrides local control. This statute is an example of “preemption,” in which the state law trumps a local ordinance. The reason the state can do this is that towns and cities have no authority to act at all unless the state gives it to them. The New Hampshire Supreme Court has said “towns only have such powers as are expressly granted to them by the legislature and such as are necessarily implied or incidental thereto.” Girard v. Allenstown, 121 N.H. 268 (1981). As a result, when a municipal ordinance conflicts with a state law, the state wins; in other words, the ordinance is preempted and no longer valid.

RSA 674:39-aa is very specific and only overrides local zoning provisions mandating involuntary mergers. There are other examples of state preemption over local zoning regulation (which can be a subject for another day), but this specific statute only addresses the merger issue.

Q: Do towns and cities have any obligations under the current law other than approving requests for unmergers?

A: Yes, one required and the other advisable.

Municipalities were required to post a notice by January 1, 2012 in a public place informing residents that any involuntarily merged lots may be restored to premerger status upon the owner’s request. The notice must remain posted until December 31, 2016 (the deadline for requesting an unmerger). In addition, the notice must be published in the annual reports for 2011 through 2015.

The other action municipalities should take involves the zoning ordinance. Every town and city should check its zoning ordinance to see if it contains an involuntary merger provision. If it does, an amendment to remove the provision is highly advisable. Leaving it in place will only cause confusion for owners and local government because it is no longer enforceable.

Q: If our zoning ordinance doesn’t have an involuntary merger provision, do we still have to worry about mergers?

A: Yes. Sometimes, it can actually be easier when there is a zoning provision because it makes clear that adjoining lots were considered to have been merged. A more confusing situation may occur when lots have simply been treated as merged over the years by either the owner or the municipality.

For example, it is not uncommon for two or more contiguous lots to be acquired over time by a single owner. If that owner then sells the entire group of lots through a deed describing them as one larger lot, the town receiving a copy of the deed from the registry of deeds may amend its tax map to show one large lot. Tax assessment and billing might then change to treat the smaller parcels as one lot. It is possible in this case that the tax map says one thing and the zoning map says another. It is also possible that the owner would not object to a single tax bill because they were unaware that this could indicate the lots had been merged.

These and other actions (or inactions) of the owner which indicate they are treating the lots as one parcel can result in “merger by conduct.” The issue usually arises when an owner wishes to convey or use the lots separately, is denied zoning approval, and brings the matter to court. Since the enactment of RSA 674:33-a, the New Hampshire Supreme Court has issued two opinions regarding merger by conduct in the context of a request to restore involuntarily merged lots. “…[O]wners can effectuate a merger of contiguous, non-conforming lots, independent of any town ordinance, by behavior that results in an abandonment or abolition of the individual lot lines.” Newbury v. Landrigan, No. 2012-039 (8/21/13); see also Roberts v. Windham, No. 2012-428 (7/16/13). In each of these cases, the property owner requested an unmerger which was denied because the governing body found that the lots had been merged by conduct.

When the matter goes before a court, it will look at all of the facts and circumstances to see whether, over all, the owner (current or former) treated the parcels as if they were one. Courts will consider factors such as the description of land contained in the deeds in the chain of title (referring to the land as a single tract or parcel of land), the depiction of the land lines shown on any plans recorded by the current or former owners and whether or not they indicate that the old lines have been abandoned, and the actual use of the property by the current or former owners as a single lot rather than as separate lots. Examples of actual use indicating that internal boundaries have been abandoned include building structures across lots lines (homes, garages, etc.), building one home with assorted outbuildings across the various lots, plans and building locations calculated with setbacks from the outer boundary of the entire parcel, and placement of driveways across multiple parcels to serve a single home and outbuildings.