Contracts for the Sale of Unsubdivided Parcels Violated the Subdivision Map Act Absent the Contracts Being Expressly Conditioned Upon the Approval and Recordation of the Final Parcel Map

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In Black Hills Investments, Inc. v. Albertson's, Inc. the Court of Appeal for the Fourth Appellate District, Division One, held that two contracts to sell unsubdivided parcels of real property before the seller recorded a parcel map in compliance with the Subdivision Map Act ("SMA") were void because the contracts violated California Government Code section 66499.30(b). The court also held that the contracts did not comply with the exception set forth in section 66499.30(e)--allowing for a contract for the sale of land to be expressly conditioned upon the approval and filing of a parcel map--because the contracts merely permitted the seller to waive the condition that a parcel map be recorded prior to the closing date and did not expressly condition the contract on the approval and filing of the parcel map.

Albertson's, Inc. ("Albertson's") entered into two contracts to sell two parcels of unsubdivided real property to Black Hills, Investments, Inc. ("Black Hills"). The contracts obligated Albertson's to obtain and record a parcel map legally subdividing the property prior to the agreed-upon closing date; however, this contractual obligation was subject to the express condition that gave Albertson's the right to terminate the contracts in the event Albertson's failed to satisfy the requirements of California Government Code section 66499.30(b) which prohibits the sale of unsubdivided parcels of real property before the seller records a parcel map in compliance with the SMA. Albertson's recorded a parcel map that subdivided the property before the closing date. One day before the closing date Black Hills stated its intent to terminate the contracts and requested that Albertson's return the deposit money. Among other allegations, Black Hills asserted that they had not received its preliminary title report for the two parcels which prevented Black Hills from performing due diligence on the parcels it contracted to buy.

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