The City will examine the divisions of land set forth in this section to determine whether or not the requirements of the MSPA and these regulations apply to the division. The fee for this examination is set forth in § 9.6.190. The requirements of these regulations and the MSPA do not apply unless the method of disposition is adopted for the purpose of evading these regulations or the MSPA, or as otherwise specifically provided, when:
(A) A division of land is created by order of any court of record in this state or by operation of law or, in the absence of agreement between the parties to the sale, could be created by an order of any court in the state pursuant to the law of eminent domain, M.C.A. Title 70, Chapter 30. Before a court of record orders a division of land, the court shall notify the governing body of the pending division and allow the governing body to present written comments on the subdivision;
(B) A division of land is created to provide security for mortgages, liens or trust indentures for the purpose of construction, improvements to the land being divided or refinancing purposes:
(1) Exemption application. This Exemption applies to any one or a combination of all three criteria listed below:
(a) To a division of land of any size;
(b) If the land divided is only conveyed to the financial or lending institution to which the mortgage, lien or trust indenture was given, or to a purchaser upon foreclosure of the mortgage, lien or trust indenture. A transfer of the divided land, by the owner of the property at the time the land was divided, to any party other than those identified in the preceding sentence subjects the division of land to the requirements of the MSPA and these regulations; or
(c) To a lot created to provide security under this division (B)(1). The remainder of the tract of land, if applicable, is subject to the provisions of the MSPA and these regulations.
(2) Statement of intent. Under policies by many lending institutions and federal home loan guaranty programs, a landowner who is buying a tract with financing or through a contract for deed is required to hold title to the specific site on which the residence will be built. The intended purpose of this exemption is to allow a person who is buying a tract using financing or contract for deed to segregate a smaller lot from the tract for security for financing construction of a home on the property.
(3) Use of exemption. This exemption is not available to simply create a lot without review by claiming the lot will be used for security to finance construction of a home or other structure on the proposed lot. This exemption may not be properly invoked unless:
(a) The claimant is purchasing a larger tract through financing or a contract for deed (and thus does not hold title); and
(b) A lending institution requires the landowner to hold title to a small lot of the tract because the smaller tract is required as security for a building construction loan.
(4) Required materials. When this exemption is to be used, the landowner must submit to the subdivision reviewer:
(a) A statement of how many interests within the original tract will be created by use of the exemption;
(b) The deed, trust indenture or mortgage for the exempted interest (which states the interest is being created only to secure a construction mortgage, lien or trust indenture);
(c) A statement explaining who will have title to and possession of the balance of the original lot after title to the exempted interest is conveyed; and
(d) A signed statement from a lending institution stating the creation of the interest is necessary to secure a loan.
(5) Rebuttable presumptions. The use of this exemption is presumed to have been adopted for the purpose of evading the Act if:
(a) It will create more than one new building site;
(b) The financing is not for construction or improvements on the exempted lot, or for re-financing;
(c) The person named in the “statement explaining who would have possession of the remainder lot if title to the exempted lot is conveyed” is anyone other than the borrower of funds for construction;
(d) Title to the exempted interest will not be initially obtained by the lending institution if foreclosure occurs;
(e) There exists a prior agreement to default or a prior agreement to purchase only a portion of the original tract;
(f) It appears the principal reason the interest is being created is to create a building site and using the interest to secure a loan is a secondary purpose; or
(g) The division of land is created for the purpose of conveyance to any entity other than the financial or lending institution to which the mortgage, lien or trust indenture was given or to a purchaser upon foreclosure of the mortgage, lien or trust indenture.
(C) A division of land creates an interest in oil, gas, minerals, or water which is severed from the surface ownership of real property;
(D) A division of land creates cemetery lots;
(E) A division of land is created by the reservation of a life estate;
(F) A division of land is created by lease or rental for farming and agricultural purposes;
(G) A division of land is in a location over which the state does not have jurisdiction; or
(H) A division of land is created for public rights-of-way or public utility sites. A subsequent change in the use of the land to a residential, commercial or industrial use is subject to the requirements of the MSPA and these regulations. (Res. 607, passed 7-1-2019)