Conspiring on Lot Splits to Skirt Rules is Illegal

Question: We live in an area of Yavapai County surrounded by national forest. Most of the privately owned land in this area is at least 5-acre parcels. Last year, a rancher split his 50-acre ranch into five 10-acre parcels and was able to sell all of the parcels except one 10-acre parcel. We have been told by a local real-estate broker that the rancher has now sold this last 10-acre parcel to an investor’s LLC for a much higher price than the four other 10-acre parcels. In addition, the investor’s LLC does not have to make any mortgage payments to the rancher for one year. The investor has no personal liability for the mortgage payments. This investor immediately began marketing this 10-acre parcel to potential buyers as five 2-acre parcels. We believe that the rancher and this investor are violating the subdivision laws because they are conspiring to make more money by selling five 2-acre parcels than one 10-acre parcel. All of the property owners in this area would like to continue to have most of the privately owned land in this area of Yavapai County be at least 5-acre parcels. Is there anything that we can do to prevent the sale of these five 2-acre parcels?

Answer: Under subdivision regulations in Arizona, an owner of land is entitled to split his land into five parcels for sale. This owner is then exempt from complying with certain requirements of these subdivision regulations — that is, filing a public report with the Arizona Department of Real Estate. Therefore, the rancher was allowed to split his 50-acre ranch into five 10-acre parcels for sale without complying with those requirements. The investor’s LLC was also allowed to split that last ten-acre parcel into five 2-acre parcels for sale without complying with those requirements. The subdivision regulations, however, prohibit individuals from “acting in concert” to avoid those requirements. In other words, there would be a violation of the subdivision regulations if the rancher and investor were “acting in concert” — conspiring — to avoid the subdivision regulations in the sale of that last 10-acre parcel. Therefore, you should contact an attorney to discuss the filing of a lawsuit requesting injunctive relief to prohibit the sale of the five 2-acre lots. You also can file a complaint with the Arizona Department of Real Estate.