PLANNING & BUILDING INSPECTION. Dale Ellis, AICP Assistant Director of Planning and Building Inspection

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1 MEMORANDUM PLANNING & BUILDING INSPECTION County of Monterey Date: June 17, 2003 To: From: Members of the Planning Commission Dale Ellis, AICP Assistant Director of Planning and Building Inspection Subject: Consider an appeal of Karl and Lisa Kleissner to the Director's administrative decision that a leased parcel does not qualify for a certificate of compliance. RECOMMENDATION It is recommended that the Planning Commission: 1. Consider the appeal; 2. Adopt a Resolution of Intent to deny the appeal and affirm the administrative decision; and, 3. Continue the hearing to July 30, 2003 for preparation and adoption of reasons for the affirmation of the administrative decision and findings and evidence, if necessary. SUMMARY Karl and Lisa Kleissner requested a certificate of compliance for a leased parcel of land in the Big Sur area. After extensive discussion and review with County Counsel, it was determined that the parcel did not qualify for a certificate of compliance. The decision involved an administrative interpretation that the execution of a lease in 1968 did not create a parcel legally cognizable under the Subdivision Map Act (SMA). That administrative interpretation has been appealed to the Planning Commission. There is no disagreement as to the underlying facts relevant to the issues addressed in the Appeal. Certificates of compliance are provided for under Section of the Subdivision Map Act. Essentially, a certificate of compliance is a determination that a parcel, at the time it was created, complied with all applicable requirements for creation of a parcel and is therefore considered to be a lot of record. The certificate is recorded and includes the following statement that relates to the effect of the certificate: This certificate relates only to issues of compliance or noncompliance with the Subdivision Map Act and local ordinances enacted pursuant thereto. The parcel described herein may be sold, leased, or financed without further compliance with the Subdivision Map Act or any local ordinance enacted pursuant thereto. Development of the parcel may require issuance of a permit or permits, or other grant or grants of approval.

2 BACKGROUND FACTS The Kleissners own a parcel of land ( original parcel ) in the Big Sur area. They applied for a certificate of compliance for a portion of that land ( leasehold ) believed by them to have been created by lease within the original parcel. The boundaries of the leasehold were formed by a 99 year lease executed in May, 1968, and recorded in June, The leasehold was never designated a parcel on a recorded map. Title to the property, (leasehold) has never been separately conveyed, neither prior to nor subsequent to the execution of the 99 year lease. The 99 year lease was granted by John Robert Louis Lange to Robert F. Coppla and Marilyn Joyce Coppla. On the same date the lease was recorded, another document, signed by Mr. Lange, was recorded in which Mr. Lange made Robert F. Coppla and Marilyn Joyce Coppla the legal heirs to Lot one... (the leasehold). An Affidavit of Death of Joint Tenant was recorded July 3, 1980, stating that John Robert Louis Lange died July 1, A quitclaim deed was recorded Dec. 7, 1979, stating that Robert F. Coppla and Marilyn Joyce Coppla quitclaimed the leasehold to Selma J. Vining, as Executrix of the Will of John Robert Louis Lange. There has been no evidence presented to indicate that the title to the property (leasehold) has been separately conveyed as a parcel since the recording of the quitclaim. SUMMARY OF APPEAL AND RESPONSE: Applicant believes that the effect of the 99 year lease was to divide the original parcel into three separate lots with the leasehold in the middle of the two remaining lots, thereby creating a legal lot which warrants a certificate of compliance. Applicant states that the lease was a division of land which created a separate and legal parcel. Applicant then relies on the presumption, under Government Code Section to conclude that the leasehold is a legally cognizable parcel. Applicant is, in effect, asking that a subdivision of three parcels be recognized without submission of a map under the SMA. The SMA is the primary regulatory control governing the subdivision of property in California. The Act vests the regulation and control of design and improvements in local agencies. Under the present SMA, maps are required for all subdivisions of property. The Act seeks to encourage and facilitate orderly community development. Maps are approved only after extensive review and consideration of many factors including, but not limited to, suitability for development, adequacy of infrastructure, preservation of sensitive lands and resources and dedications. Exceptions to these controls should be narrowly construed. Our Department and County Counsel believe that Section does not apply to the leasehold in this case. Government Code Section is a grandfather provision which provides that lots created as a result of a division of land prior to March, 1972, are presumed to have been legally created. Obviously, for this section to apply, a lot must have been created and further, such creation must have resulted from division of land. Neither apply here. The 1968 lease did not create a parcel legally cognizable under the SMA, nor was it created as a result of a division of land. A lease is a transfer of possessory interest. It is not a conveyance of title and does not

3 create a legally cognizable parcel warranting a certificate of compliance. The boundaries of a leased premises do not establish a legally cognizable parcel. When a lease terminates, the boundaries of the leased premises it simply ceases to exist. There is no conveyance or reconveyance of the title to the underlying property or the other rights involved. The lease simply terminates, the boundaries cease to exist and all rights revert to the owner of the underlying fee. This lease did not create a legally cognizable parcel. Further, there was no division of land as a result of the lease executed in Pursuant to the law in effect in 1968, dividing property into four or fewer lots did not, by definition, constitute a subdivision. Finally, Appellant has produced no authority to show otherwise. There is no other basis on which it may be argued that the leased premises in this case created a legally cognizable parcel. There has been no evidence presented that title to this property as a separate parcel has ever been conveyed, has ever been designated a parcel on a subdivision map, or has ever been sold or transferred. There is simply no evidence that a legally cognizable parcel has ever been created. Each of the specific bases raised in the Appeal is addressed in Attachment B. OTHER AGENCY INVOLVEMENT County Counsel concurs with this recommendation. cc: County Counsel, Appellants Attachments: Attachment B: Kleissner appeal; Attachment B: Individual Responses to Each of the Issues Raised In Appellant s Appeal

4 ATTACHMENT B INDIVIDUAL RESPONSES TO EACH OF THE ISSUES RAISED IN APPEAL Following is a response to each issue raised by Appellant in the order raised in the appeal: ISSUE: The California Subdivision Map Act s Certification Program (Page 3 of Appeal) Appellant argues that the presumption presented in Section (a) applies to the leased premises leased under the 99 year lease. RESPONSE: Government Code Section (a) states in relevant part,...any parcel created prior to March 4, 1972 shall be conclusively presumed to have been lawfully created if the parcel resulted from a division of land... (emphasis added) The primary requirement for the application of the presumption to a parcel is that the parcel has been created. If created, it must have resulted from a division of land. Applicant s contentions fail on both accounts. First, the California Supreme Court has recently addressed the creation of parcels in the context of another grandfather provision found in the SMA. In that case, the Supreme Court stated that a grandfather provision of the SMA (Section ), also addressing the creation of lots, does not provide a basis for legal recognition of lots in the first instance and that unless an applicant can provide authority that a parcel has been created the reliance on the grandfather section is misplaced. (Gardner v. County of Sonoma (2003) 29 Cal. 4 th 990) Appellants provide no authority for the proposition that a lease creates a legally cognizable parcel for purposes of the presumption in Section Since they cannot provide such authority, their reliance on Section is misplaced. The word create as used in these grandfather sections of the SMA means to form a legally cognizable parcel under the Subdivision Map Act. There is no evidence that the legislature intended to provide that a previous lease of land, be deemed a creation of a parcel legally cognizable under the SMA and warranting a certificate of compliance. A lease is a transfer of possessory interest. It does not involve any transfer or conveyance of title or changes in the ownership or boundaries of the underlying fee. Upon termination of a lease, there is no conveyance or reconveyance of the rights involved, the lease simply terminates and all rights revert to the owner of the underlying fee. There is no reason for the legislature to provide that a lease creates a legally cognizable parcel and there has been no authority produced on which to base such a contention. Second, if created, the parcel must have resulted from a division of land. Applicants have not shown that this lease resulted from a division of land. This lease was not a subdivision or division of land subject to the

5 subdivision statutes in effect in If it were a subdivision or division of land under the SMA, a parcel or final map would have been required. In May, 1968, at the time of this lease, the statutory regulation of the subdivision of land was found in the Business and Professions Code. Section 11535(b) of that Code stated: Subdivision does not include any parcel or parcels of land which is divided into four or less parcels. Since this lease involved dividing a parcel into three pieces, it was by definition, not a subdivision and the SMA did not apply. The lease in this case was not a subdivision under the SMA and did not create a parcel legally cognizable under the SMA. The grandfather provision of Section does not apply. ISSUE: Written Opinions from the County of Monterey s County Counsel Office (Pages 3-5 of Appeal) Appellant claims that a prior opinion issued by the County Counsel s Office states that the term division derives its meaning from the statutory definition of subdivision and that the execution of a deed of trust creates a new parcel pursuant to Section , and that this supports applicant s position. RESPONSE: This argument lacks merit. The earlier opinion is inconsequential because it addresses a deed of trust, which is different than a lease. A deed of trust involves an actual conveyance of a fee simple estate, whereas, a lease does not. A lease conveys a possessory interest only, it does not convey the underlying fee and it does not change the ownership or boundaries of the underlying fee. Rather, upon termination of the lease, the rights revert to the fee holder. The appeal quotes extensively from the earlier opinion, but stops short of an important part of the opinion. The paragraph following the last one quoted in the Appeal states in part: With a trust deed, legal title is actually conveyed to the trustee and remains there (Emphasis added). With a lease, only a possessory interest is transferred, and even that reverts to the owner upon termination of the lease. The title to the underlying fee is not conveyed by a lease. The opinion concerning a deed of trust is not necessarily applicable to a case involving a lease. Further, while the earlier opinion is not inconsistent with the present opinion, even if it were, it would not necessarily control this opinion. ISSUE: The Monterey County Code (Pages 5-6 of Appeal) Appellant claims that since Monterey County Code Section (A)(1) (sic)(we believe this was intended to be (A)(1)) states that a contract of sale or deed of trust recorded before March 7, 1972, is sufficient to create a new parcel, a lease is sufficient to create a new parcel. RESPONSE: It is apparent from the face of MCC Section (A)(1) that it this provision was not intended to apply to leases. Section (A)(1) does not mention leases. This Section provides that a parcel is deemed created where it was conveyed by a deed, deed of trust or bonafide contract of sale... There is no provision for a lease. The basic requirement is that written evidence be presented showing the property was conveyed by a separate document as a separate parcel and states: Evidence may be in the form of a contact of sale, grant deed, or deed of trust...or other evidence such as copies of receipts for installment payments, etc., or similar written documentation which establishes a bona fide conveyance. It is particularly telling that the extensive listing of examples do not include a lease, leasehold,

6 lessee, etc., or anything similar. There is reference only to documents evidencing a sale or transfer of title. As mentioned above, a lease does not involve the sale or transfer of title. The omission of any inclusion of leases, etc, in these provisions indicates there was no intent to include them. ISSUE: The California Subdivision Map Act s Prior Compliance Exemption (Pages 6-7 of Appeal) Applicant asserts that Government Code Section exempts this leased parcel from the SMA s general prohibition on selling, leasing or financing real property for which a parcel map is required since it was leased in compliance with or was exempt from regulation at the time the lease was executed. RESPONSE: Applicant s contention lacks merit. To the extent that G.C. Section (d) applies to the lease in this case, it applies only to the lease executed in Any new sale or lease would have to comply with the SMA. The 1968 lease ceased to exist due to the quitclaim executed in 1979, therefore, Section (d) has no application at all in this case. ISSUE: The Quitclaim Deed (Pages 7-8 of Appeal) Applicant states that the County has taken a position that the lease created a legal parcel which later merged into an unspecified larger estate on delivery of the quitclaim deed. Applicant also states that County asserts a merger argument. RESPONSE: County does not take the position that the lease created a legal parcel. In fact, County asserts just the opposite, i.e. the lease did not create a legal parcel. Regarding the quitclaim, the County simply asserts that as a result of the quitclaim deed, executed by the Copplas and recorded in December, 1979, all rights in the property, including possessory rights under the lease, were conveyed to the executor of Mr. Lange s estate, holder of title to the underlying fee. The lease thereby ostensibly terminated and the leasehold ceased to exist. There was no evidence nor authority presented to show that the lease or leasehold survived this quitclaim. Regarding merger, County does not assert a merger argument. For merger to apply, there must be an existing parcel. It is County s position that a legally cognizable parcel was not created by the lease and therefore there was no existing parcel. Regarding the lease, the quitclaim did not convey title to the fee, it simply terminated the lease.