Oregon Legislature Revives Property Line Adjustments

Oregon Legislature Revives Property Line Adjustments

By Real Estate and Land Use Practice Group

House Bill 3629 (“HB 3629”), which became law on March 3, 2008, revives the property line adjustment, a common land use tool which had been left for dead after a series of decisions rendered it effectively worthless. HB 3629 was intended to affirm the usefulness of these adjustments and somewhat redefine the situations in which these actions may be used. This new legislation allows property owners the chance, once again, to redefine the boundary lines of their real property. While the new property line adjustment statute somewhat limits the situations in which these adjustments may be used, most property owners that would have benefited under the old rules should still find the new version of the property line adjustment useful.

The concept behind the property line adjustment is about as simple as the name suggests; it is the adjustment or elimination of a common property line between two adjacent pieces of property. For years, property line adjustments were a land use tool used by property owners to achieve a number of goals, not all of which were directly related to land use issues. These adjustments have always been especially helpful in resolving boundary disputes between neighbors and reconfiguring large tracts of farm land owned by the same person or entity. However, property line adjustments have also been useful tools for remedying past illegal land segregations, and even accomplishing estate planning and succession goals by providing a flexible way to reconfigure real property assets.

In January 2007, the Land Use Board of Appeals (“LUBA”) issued its decision in Phillips v. Polk County, reversing Polk County’s approval of two property line adjustments and a farm dwelling. Most significantly, LUBA held that any parcel that is affected by a property line adjustment must comply with minimum parcel requirements after the adjustment, even if one or both of the adjusted parcels were less than the minimum parcel size applicable in the zone in which the land was situated. Since many rural parcels legally exist below minimum applicable parcel sizes, LUBA’s interpretation stripped away the usefulness of the property line adjustment for a large amount of landowners.

An appeal followed LUBA’s decision, in which the Court of Appeals affirmed the ruling below, in Phillips v. Polk County, 213 Or App 498 (2007). Interestingly, while the Court reached the same result, it arrived there a different way. The Court essentially held that a different section of state law prohibited the creation of a new parcel through a property line adjustment that did not meet the minimum parcel size. The Court reasoned that nothing in ORS 215.780 authorized a land use decision that created parcels less than the minimum parcel sizes applicable. This ruling ran counter to how most authorities had conceptualized the property line adjustment. The Court characterized any newly adjusted parcel as a newly created parcel for land use purposes. As such, it had to meet minimum parcel sizes applicable in the zone in which the real property was situated.

The Oregon Legislature responded almost immediately to the ruling by entertaining a bill that sought to reinstate the property line adjustment by distinguishing the definition of what constitutes an adjustment from a partition. The bill did not make it through by the end of the 2007 Legislative Session, but reappeared as HB 3629, in somewhat revised form, for the 2008 Special Session. In the interim, the main issues were addressed in the revised bill, which led to a speedy passage though the legislative process. On March 3, 2008, the Governor signed HB 3629 into law, less than a month after it was introduced in its current form.

While property line adjustments may be conceptually simple, there are certain issues that still prove to be troublesome for certain property owners. Especially now that the adjustments are not as flexible as they were previous to Phillips, property owners that are considering the use of these adjustments should be mindful of a few of these key issues. The most notable of these involve rural dwellings in resource zones. Often, rural landowners must meet a certain acreage standard in order to qualify for a dwelling on their land. The new law will prohibit a property line adjustment where one lot or parcel already containing or approved for a dwelling is decreased in size, and the adjacent lot or parcel is increased in size over the minimum acreage standard used to qualify the land for another dwelling. This new rule would seem to apply even if the adjacent landowner had no intention of building a dwelling on their land. This obstacle may potentially be overcome by recording a restriction on the land which would prohibit any sort of residential use. However, that solution could have other negative implications which could trump any benefit it might provide.

Another issue that concerns both urban and rural property line adjustments is the burden to prove the existence of a legal unit of land. Property line adjustments can only be made on legal boundary lines. Tax lots, while often representative of legal units of land, do not always accurately reflect which lines are eligible for modification. Depending on deed records and the records available in the applicable jurisdiction, this could be a much more challenging inquiry than would initially appear. Additional issues may arise depending on which jurisdiction your real property is subject to. Each local jurisdiction is unique, and a property line adjustment that may be approved in one may not necessarily comply with the rules in another. The City of Salem is unique in that it will only allow a property owner to do three property line adjustments within a six month period; otherwise the property owner must apply for a replat of the property. Also, the City will more closely scrutinize the boundary between certain properties to see if it is made up of more than one property line. With regards to rural land adjustments, both Marion and Polk County may require you to prove that your adjustment will not adversely affect resource uses in the area.

As of early March, when HB 3629 became law, all local jurisdictions have begun accepting property line adjustment applications. Unlike most land use regulations passed by the Legislature that take time to implement at the local level, local jurisdictions have been able to pick up where they left off prior to Phillips, following the exact same local rules and using the same applications.

Please feel free to call a member of the firm’s Real Estate and Land Use Group if you would like further explanation regarding the new property line adjustment regulations, or if you would like to discuss how these adjustments may be useful to you.