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What Is a Key Lot?

Mary McMahon
Updated May 16, 2024
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A key lot is a piece of real estate that sits in an important location and has a higher value because of the nature of the location in relation to other pieces of property. This term can also apply to a long, narrow lot in a cul de sac, created when a developer splits lots into portions and needs to change the shape of one to make the others fit in around it. This type of key lot may have less value because of the odd shape, which can create a situation where the land lacks privacy and may not accommodate a very large house.

In the case of a key lot with added value, the lot is necessary for a buyer to get the maximum value out of adjoining property. One example can be seen in urban areas where developers buy neighboring lots to create a large structure that will span multiple lots. As they buy up the lots, one lot can emerge as the key lot the company needs to be able to develop the property. The owner may refuse to sell or could hold out for a higher price, well aware of the fact that the developer must have the key lot to proceed.

The key lot may be important because of the position it occupies, such as sitting in the middle of the block, or because of the shape of the lots in the area. The owner may be aware that the land is worth more because of its position or shape, especially in situations where there is interest in neighboring lots. Someone may make an offer for it with the goal of building up a larger piece of property for a project like a mall or apartment building.

In a cul de sac, a key lot can be created where the road rounds or bulbs out. It can be difficult to fit other lots with regular shapes into the space, and having a single long, narrow lot to equalize the space can make it easier to create standardized lot shapes and sizes. This will be the key lot, and it can vary in shape and size. It may have less privacy than other lots because of the position and could also be in a noisy and highly trafficked position. This will make it less desirable.

Locations of key lots can shift over time. A lot with critical importance in one real estate deal may become less so over time, due to shifting land use patterns and development plans. Sometimes a lot may have an artificially inflated value and this could end up creating problems for the owner. If she mortgages it at the high price, for example, it can be hard to sell at this value to pay off the remainder of the loan in the future.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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