When does a lease amount to a subdivision?

An interesting question that comes up from time to time is whether a cell tower lease or a lease for a billboard creates a new lot, with the attendant issues of whether subdivision approval must be obtained and the local zoning regulations met. In a recent case out of Maine, Horton v Town of Casco, 2013 WL 6685140 (Me. December 19, 2013), the court reviewed this issue in the context of a cell phone tower and concluded that the lease did not create a new lot, did not have to comply with the subdivision regulations, and that the zoning regulations were met based on the larger lot within which the lease was granted. The Maine court indicated that while a lease might create a lot., the legal interest thereby transferred had to be of “sufficient dignity” to create a subdivision. The court held that it is the nature of the transferred interests, not the type of contract or instrument facilitating the transfer that determines whether a new lot is created.

Citing an earlier case where campsites were rented for a limited period of time, and distinguishing it from a another precedent where timeshares for parking recreational vehicles (for an almost indefinite fee interest), the court held that since the cell carrier did not have exclusive rights to the leased property, and that the right it did have was for a finite period, the legal interest was more a license and not sufficient to create a new lot.

The Tennessee courts have not addressed this specific issue related to cell towers, billboards, and other such specific uses of property typically associated with a leasehold interest. However, the Tennessee Court of Appeals has had occasion to review the issue of whether a leasehold interest of whatever nature is sufficient to invoke the requirements of the state subdivision regulations.  In City of Church Hill v Taylor, 1996 WL 605247 (Tenn. App. 1996), the appellate court upheld the decision of the trial court finding that there was a subdivision of land for the purposes of the Tennessee enabling statutes only when property is sold and not when sites are leased. In this case, the leasehold interests were lots for the placement of manufactured housing. “We believe the Trial Judge was correct in employing such a construction. In so finding, we recognize that the problems sought to be alleviated would result as much from leasing trailer sites as from selling them. We conclude, however, that the Planning Commission's remedy lies with the Legislature, and not with the courts.” There has been no change in the definitions since the time of this decision.

Obviously, that still leaves the issue of zoning regulations, but assuming that the use is legal, that is permitted within the zoning district, for the most part bulk regulations should be of little difficulty. At the time of the decision in Taylor, I discussed its impact with a number of my planning colleagues. The most part, they did not seem too concerned about the relative importance of this case; my perspective has been and continues to be that this is a fairly major loophole that someday ought to be closed.