When homeowners receive a property tax bill, some see more than one assessor’s parcel number listed for a single property. Ever wonder why? Well, let me explain.
An assessor’s parcel number, or APN, is simply a number assigned by the tax assessor to assure the property is taxed appropriately. A unique APN does not equate to a legal parcel. A legal parcel is a segment of real estate that a city or county has determined is a separate, salable parcel with no use restrictions except those required by zoning and code compliance—and it may include multiple APNs.
An illegal parcel is a parcel that local governments do not recognize and therefore the owner cannot obtain building permits or conduct other activities on the property. It’s easy to think that all parcels are legal because they have a unique description recorded with the county; however, the county recorder’s office limits its review to the validity of document itself (not the legality). Weird, I know.
This means that if you and your brother inherit a legal 40-acre parcel, and you two decide to split the property in half, you could accurately describe each of the parcels and record a grant deed for each; however, that does not make them legal parcels. The resulting parcels have significant restrictions on future use, and therefore, on their market value. Remember, two APNs doesn’t mean two legal parcels exist.
To create legal parcels, an owner must either subdivide or go through the certificate of compliance process. The certificate of compliance process is far easier, drawing less scrutiny, taking less time, and costing less money. Government regulation is less restrictive and less expensive, which also reduces or eliminates the price of professional services like surveyors. So given the choice between subdividing and completing the certificate of compliance process, always choose the latter.
Sadly, not all properties qualify for the certificate of compliance process. The certificate of compliance process can only be used if the property in question was ever in its history more than one legal parcel. If more than one parcel existed, you can go back to however many legal parcels existed. If you don’t like the original configuration, a boundary line adjustment can reconfigure the parcels to your liking. For example, if a half-acre parcel was added to an 80-acre parcel, a certificate of compliance process can break the property back into two legal parcels. The owner can then request a boundary line adjustment to divide the property into two 40.25-acre parcels (or a 20.5-acre parcel and a 60-acre parcel). Parcels do not have to be the same size, but they must generally comply with the current zoning.
This recently happened at the old Masonite property. The owner used the certificate of compliance process to create 14 parcels where only three existed, making the property more valuable and easier to sell.
If a property has never been more than one parcel, your only means of creating more than one legal parcel is to subdivide. Unless you have a cast iron stomach and a fearless heart, do not go down this road.
There are two types of subdivisions: a four-way subdivision and a major subdivision. A four-way subdivision cuts a parcel into four pieces with one left over (so yes, five legal parcels). Four-way subdivisions are handled at the county level (unless they’re within the city limits) and they are infinitely easier to manage than a major subdivision, which requires state-level scrutiny and compliance.
So to review: do not to be tricked into thinking an APN indicates anything other than a record-keeping number, and if you want to legally split your property, cross your fingers and toes that it was more than one legal parcel at some point in the past.
If you have questions about real estate or property management, please contact me at firstname.lastname@example.org or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.