Outlots

Different people call different parcels of land “outlots”.  County surveyors (and often courts) use “outlot” to describe large undivided parcels of land that could be divided into lots and blocks.  City planners call oddly-shaped parcels and left-over remnants “outlots”.  Mall developers call spaces reserved by the street for drive-through restaurants “outlots”.

When a city allows a developer to create an outlot, the city needs to recognize that a court may consider the “outlot” to simply be a lot by another name.  As such, a court will grant the owner the right to further divide the parcel, construct a building, put in a driveway, and generally use the outlot as if it were a platted lot.  If the city intended for the outlot to be kept as open space, or later attached to another parcel of land, the city must impose these restrictions on the land.  Merely assuming this, or placing restrictions in a contract with the current owner, will not protect the city and the neighbors from future development.

Consider the typical evolution of the use of land.  Initially land is open prairie, woods, or farm.  As nearby communities grow, the land owner may split off a portion of the land into lots and blocks, retaining another portion for future development.  This area for future division is called an outlot.

Historically, the lots for development were called “in lots”, because they were located in blocks.  The parcels of land left over, outside of the blocks, were called “out lots”.   “In lots” (now “lots”) were given a lot and block number; “out lots” (now “outlots”) were designated by letter.  In 2007 the legislature finally codified this difference, by defining the terms “lot” and “outlot”.  The distinction applies only in writing legal descriptions, however.  It has little to do with the physical arrangement of the lots and outlots on the ground.  For example, if a land owner divided an area into a block with lots, the lots would be numbered consecutively, and the block also would be given a number.  If half of the block were small lots, and the other half of the block a single large lot, the large lot could be given a number like the others, or it could be called Outlot A.

Land left in an outlot may be divided into lots later.  Although new metes and bounds descriptions could be created instead, the possibility of errors, gaps, and overlaps is minimized by dividing all of a parcel into lots and outlots.  For taxation, sale, or development, the courts generally treat outlots the same as any other lot.

When the term “outlot” applies to undeveloped but developable property (such as the half block situation described above), few problems arise.  Unfortunately, city planners frequently allow or require undevelopable parcels to be designated as outlots.  Undersized remnants of larger parcels, parks and playgrounds, open space, and even street right-of-way have been labeled outlots.  This can create serious problems as circumstances change.  Undersized lots may be inadvertently grandfathered, allowing construction; planned development might fail, making the dedication of park land questionable; intended open space might be lost; and streets might not be constructed as expected, leading to claims of a reversionary interest.  Individuals who share undivided ownership interests in an outlot may perceive the outlot as their protected open space, to be held against others who have equal legal right to use the property.  Other individuals may think the outlot is simply another lot, to be used as any other property.

Presently property owners create outlots most frequently in two situations, which epitomize this dichotomy.  First, developable parcels at the outskirts of new mall development often are termed outlots.  These outlots are sold or leased for restaurants (near retail malls) or medical office buildings (near hospital campuses).  Second, the common areas in common interest communities under Minn. Stat. Chapter 515B are termed outlots.  The owner of each lot in the common interest community has an undivided ownership interest in the common areas.  As a result, although the common area outlots may be large enough for further division and development, title problems and restrictive covenants effectively prohibit that.

Whether a particular outlot can be divided or developed depends the restrictions that apply to that particular outlot.  Factors to consider include local zoning and subdivision regulations, the presence or absence of recorded covenants, and the likelihood of litigation with the neighbors (if they would object to development).  So long as city planners and land developers continue to use “outlot”as shorthand for “something other than a regular lot”, rather than its historical meaning of “a lot not in a block”, these questions will need to be answered on a case-by-case basis, for each outlot.

 

1. See In re Petition of Schaller, 259 N.W. 529, 193 Minn. 604 (1935), quoting G.S. 1849-1858, c. 26,
§§ 1 and 5, describing laying out a town and describing “all in and out lots or fractional lots”. Although
“outlot” makes sense as the opposite of “in lot”, sometimes the term “outlot” has been used to refer to
odd remnants of land, even when no lots are being created. See, e.g., City of New Ulm v.
Schultz, 356 N.W.2d 846 (Minn. App. 1984). In that case, a city sought to acquire parts of a farm to
provide a clear zone around an airport. The court described the argument of the affected farmers as
follows: “Should the city be allowed to condemn and take fee interest in the land in question, their
remaining farms will be odd-shaped, some with triangular outlots and some with inaccessible outlots.”
 

2.Minn. Stat. § 505.01, Subd. 3.
 

3. For an excellent example of how confusing this can be, see In re Vondall, No. 06-6069MN (8th Cir.
March 16, 2007). In this bankruptcy case, a mortgage incorrectly referred to Lot B, Block 3, instead of
Lot 13, Block 3. The issue before the court was whether the legal description was plausible, or facially
invalid. The court’s decision may have been impetus for the definitions adopted in 2007: the court did
not understand the significance of designating a parcel by a letter versus a number. In Minnesota, there
should never be a Lot B, Block 3. A parcel “B” would be an outlot, without reference to a block. The
reference to a Block signals that the Lot should have been identified by number, not by letter.
 

4. See, e.g., Amato v. Haraden, 159 N.W.2d 907, 280 Minn. 399 (1968) (involving property described
as “rearrangement of out lots "L" and "M", original plat of Chisholm”); Romain v. Stael, No. A04-2227
(Minn. App. August 2, 2005) (attempt to replat a lot and outlot together);
McNulty Construction Co. v. City of Deephaven, No. A03-889 (Minn. App. January 20, 2004) (property
owner sought to split an outlot into one buildable lot and a new outlot).
 

5. See, e.g., C and R Stacy, LLC v. County of Chisago, 742 N.W.2d 447 (Minn. App. 2007);
Hansen v. County of Hennepin, 527 N.W.2d 89 (Minn. 1995); Hawkinson v. County of
Itasca, 231 N.W.2d 279, 304 Minn. 367 (Minn. 1975).
 

6. See, e.g., Ocel v. City of Eagan, 402 N.W.2d 531 (Minn. 1987). In footnote 1, the court notes
“Apparently, the storm sewer was designed to discharge surface waters onto the lot in question, which
originally was designated an outlot and may not originally have been intended for a residential site.”
See also Johnson v. City of Shorewood, No. A06-2353 (Minn. App. February 19, 2008), describing an
outlot as “a narrow, irregularly shaped outlot between the southern boundary of the subject property
and a public street called Waterford Circle.”
 

7. In re Holzgrove, No. A05-1017 (Minn. App. April 11, 2006) (several 100-foot lots were platted along
a lake, and a 70-foot remnant left as an outlot); Dorenkemper v. City of Eden Prairie, 394 N.W.2d 546
(Minn. App. 1986) (parks and playgrounds); Good Value Homes v. City of Eagan, 410 N.W.2d 345
(Minn. App. 1987) (open space); Middlemist v. City of Plymouth, 387 N.W.2d 190 (Minn. App. 1986)
(road right-of-way); County of Dakota v. Gopher Smelting and Refining Co., No. A06-120 (Minn. App.
August 29, 2006) (street right-of-way).
 

8. In re Holzgrove, supra, (after multiple ordinance amendments, the remnant was inadvertently
grandfathered into being a legal lot); Dorenkemper, supra, (after rezoning stripped the developer of the
ability to divide the remainder of its property, the developer sued to get back an outlot he had dedicated
for parks and playgrounds); Good Value Homes, supra (open space protected in a development
agreement with the city was not protected against development after it was sold to a new party);
Middlemist, supra, (developer fought requirement that he dedicate an outlot for a street);
County of Dakota, supra, (property owner attempted to claim reversionary interest in outlot deeded to
city as right-of-way).
 

9. See, e.g., State v. Roland, No. C7-95-1005 (Minn. App. March 5, 1996). An outlot provided
common access to a lake. One property owner was given permission to put his driveway on the outlot.
The homeowners’ association tried to force him to remove the driveway, and when he did not, the
association planted trees and put posts across the driveway. When the property owner removed the
trees and posts, he was prosecuted for trespass and criminal damage to property.
See also Garberg v. Millerbernd, No. C7-02-1865 (Minn. App. June 3, 2003). A plat created 17 lots
and an outlot. The lots lacking lakeshore were given a partial ownership interest in the outlot, to give
them lakeshore rights. Those lot owners tried to keep the lot owners who had lakeshore from using the
outlot for access to the lake. However, a declaration of covenants filed with the plat gave all lot owners
the right to use the outlot. The court ruled that the declaration controlled.
 

10. State v. Roland, supra. See also Bly v. Gensmer, 386 N.W.2d 767 (Minn. App. 1986), where
Plaintiffs entered into a purchase agreement for a lot and an outlot, and claimed they did not know the
outlot was supposed to be covered by a conservation easement. Once the easement was put in place,
Plaintiffs filed a lis pendens on all lots in the subdivision, to try to force the removal of the easement.
Cf. Sterling Ventures, Inc. v. Scott County Board of Commissioners, No. C8-99-1524 (Minn. App.
February 29, 2000). Plaintiff sought a conditional use permit on an outlot., and the county argued that
outside storage on an outlot was not permitted.
 

11. See, e.g., First Union Management, Inc. v. Kmart Corp., No. C3-93-2258 (Minn. App. July 26,
1994). Issues arose regarding the proposed construction of an Arby’s restaurant “for one of the mall
outlots”. A mall anchor tried to place conditions on the construction, based “on a corporate policy to
extract rent concessions from all of its landlords in return for consent to outlot developments.”
 

12. But see The Preserve Association v. City of Eden Prairie, 421 N.W.2d 419 (Minn. App. 1988),
where an open space outlot was owned in common by some 1,400 lot owners. The possibility that the
open space would be sold to a developer was vanishingly small. However, since the courts treat outlots
and lots alike, when this issue was presented to the court of appeals, it ruled that the outlot had value
that was increased by the construction of new streets and utilities nearby.

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