Creating Vertical Subdivisions for Fun and Profit.

Author:Krumbein, Sandra E.

Vertical subdivisions are an urban concept allowing multiple separate parcels containing separate uses to be stacked in airspace under a single roof. (1) Sometimes referred to as mixed-use development, vertical subdivisions are becoming more prevalent as Florida becomes more urbanized. Why would a developer choose a mixed-use project? Because the sum of the parts may be more valuable than the whole. Such a structure may increase the value of a proposed project by making the individual components more valuable when tied together in a single structure. For example, a project containing both a hotel and residential units may allow residential buyers access to hotel services, such as housekeeping and dining, making such units more valuable. In addition, the hotel may benefit as being the most convenient accommodations for those visiting the residential occupants. Also, from a utilitarian view, it may make a residential project much more desirable when there is ground-floor retail space to service the residents.

There may be issues regarding whether slices of airspace are recognized as separate fee interests in real property. The U.S. Supreme Court has previously opened the door to this concept by limiting ownership of airspace associated with a parcel of land to the airspace below navigable airspace to permit commercial aviation. (2) Thus, airspace has already been sliced between navigable and non-navigable airspace.

From a textbook perspective, however, there is some question on the ability to slice airspace into separate pieces. (3) There is an absence of Florida caselaw determining whether slices of airspace can be separately conveyed. Despite the absence of caselaw, however, title companies will generally insure an interest in airspace. Such an approach is consistent with severing below-ground mineral interests from the surface of the property.

The Florida Condominium Act, however, does recognize that a condominium can be created in airspace. (4) In such case, each unit may consist of a parcel of air. A related discussion on the use and transfer of airspace for purposes of development can be found in an April 2015 Florida Bar Journal article, "It's Up in the Air: Air Rights in Modern Development." (5)

Creating Vertical Subdivisions

Unlike horizontal subdivisions, there is no legal authority to plat a vertical subdivision. Vertical subdivisions are created in one of two ways: 1) by transfers of title to airspace parcels each with a separate metes and bounds legal description utilizing elevations, i.e., creating three-dimensional legal descriptions; 2) or by creating a condominium regime.

* Metes and Bounds with Elevations--Vertically subdivided parcels require a three-dimensional legal description because the drafter is describing a column of air. Added to the typical two-dimensional metes and bounds description are elevations. These elevations have a lower elevation end point and an upper elevation ceiling. However, within this envelope of air, the two-dimensional legal description may change: consider an office building in a wedding-cake design with multiple setbacks. This fact requires the drafter to verify three components of the legal description rather than two, requiring an elevated level of care.

The issues in a vertically subdivided project will be described in more detail subsequently, but it requires some form of declaration of covenants, restrictions, and easements to unify the various pieces of airspace so that a building containing the airspace parcels functions as a unified whole. For example, easements have to be imposed for support, availability of utilities and access for each of the separate parcels. This type of arrangement will be described as a "fee simple vertical subdivision" or "FSVS" for short.

* Condominium Regime--The...

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