Looking to subdivide or buy a subdivided property?

Are you considering subdividing your land or purchasing a house that has been subdivided? This article will help you understand more about the subdivision process, if you can subdivide, what to do once you have consent and much more.

There are a number of reasons for considering subdivision, such as financial or family reasons. Subdivisions can enable landowners to make their land more profitable or better suited for their purposes. For instance, a boundary adjustment may enable land to be more
effectively farmed or subdivision of a farm may allow a retiring couple to retain ownership of their family home but sell off the remainder of the working farm.

A Vendor's Perspective

Who should you contact first?

If you are thinking about subdividing it is important that you properly inform yourself of all of the potential implications of a subdivision. This means talking with various professionals. For instance, an accountant will be able to advise you on whether there are any tax issues involved in the subdivision of your land.

Your lawyer will be able to advise you on whether there are any issues with your title and in respect of the district plan rules you will need to comply with.

Your surveyor will be able to prepare a plan of the proposed subdivision and assist in the application for a resource consent. Having a good team of people involved will assist you to navigate through the subdivision process smoothly.

How do you know whether you can subdivide?

Under the RMA (Resource Management Act) activities are classified as permitted, controlled, restricted discretionary, discretionary, noncomplying or prohibited. In order to ascertain the activity status of your proposed subdivision, you will need to review the relevant district plan which applies in your area.

If your subdivision is not a permitted activity, and in most cases it will not be, you will need to apply to your local District Council for resource consent to subdivide land. More complex subdivisions, for example those involving coastal land or access over waterways may also require Regional Council approval.

Your lawyer will be able to advise you on the rules which are likely to be applicable to your proposed subdivision and on the criteria which you may need to comply with in order to obtain resource consent.

This can include matters such as the size and shape of the proposed allotments, proposed building platforms and sewage and storm water drainage.

The subdivision process

Once you have finalised your subdivision plan and application for consent, they can be lodged with the Council. The Council must then decide whether to publicly notify the application or not. If the application is publicly notified, this can mean that a hearing will be held and the process can be prolonged if affected persons oppose your application. The Council may also decide that more information is required before they can assess the application and request further information from you, which can also result in delays.

After the application has been assessed and assuming the application is approved, consent is usually granted subject to certain conditions. Conditions should fairly and reasonably relate to the subdivision. Examples of common conditions include the requirement to provide access, stormwater, sewage and/or water services, and building platforms.

What do you do once you have consent?

Once resource consent has been granted, you will need to arrange for your surveyor to complete the necessary survey work and the work required by the conditions of the resource consent. When the work has been completed, your surveyor will need to apply for section 223 and 224 RMA certificates from the Council.

The certificates confirm that the Council is satisfied that the survey plan conforms with the subdivision consent and that the conditions of consent have been complied with. The certificates are necessary so that your survey plan can be deposited with the Registrar General of Land and thereafter titles can issue.

As subdivisions can be complex and involve a wide range of conditions, it is not always simply a matter of obtaining resource consent to ensure a subdivision will proceed. 

What do we, as your lawyers do?

The subdivision process can be time consuming, complex and contains many legal pitfalls. We understand the unique demands that the subdivision process entails and are familiar with the wide range of subdivision matters. We keep up to date with current economic trends and Government policy that affect the subdivision.

A large subdivision is likely to involve negotiations with district and Regional Councils, banks, purchasers and their solicitors, real estate agents and neighbouring owners of the land intended to be subdivided. These parties all have different interests that need to be taken into account. As well as assisting with these negotiations and advising you in respect of your legal rights and the applicable district and/or regional plan rules, we prepare the various legal documents needed for a successful subdivision.

We are also able to advise on the best legal methods for implementing your particular vision. This may include registering covenants over the land to protect certain features on the land or ensuring that appropriate legal structures are in place.

A Purchaser's Perspective

It is commonly thought that purchasing a bare piece of land should be fairly straight forward. Unfortunately this is not always the case. If the purchase of the bare land is subject to the vendor first completing a subdivision and/or obtaining a new certificate of title for the section there are a number of issues that purchasers need to be aware of. You should always contact your lawyer for advice prior to signing an Agreement for Sale and Purchase.

What do you need to watch out for?

When deciding on a piece of land to buy there are a number of practical things to watch for, some more obvious than others. For example:

Search the Record of Title

Your lawyer will be able to obtain a search of the existing record of title for the parent title that is to be subdivided, which your land forms part of. It is important to check whether there are any existing easements, restrictions, consent notices, land covenants or other encumbrances that affect the property.

Often the existing easements and covenants are not surrendered prior to the new title issuing which means you will be bound by them together with any new easements, restrictions or covenants which are required for completion of the subdivision.

Easements

It is important to make sure that you know who owns all rights of access and where water, drainage, power and telephone lines have been laid. If these appear to cross another property before they reach your property, then you will want to be sure that proper legal easements are in place. If that is not the case you may find that your neighbour can prevent your use of these services which cross their property.

The existence of any easements, restrictions, encumbrances or land covenants may restrict the position in which you can site any building on the land. You should also check any maintenance and repair obligations in respect of any easements registered against the title.

Covenants

In larger subdivisions, the developer of the subdivision may require all purchasers to agree to be bound by various land covenants. Land covenants essentially restrict what you can and can’t do on your land. If the land you are considering buying is subject to a covenant, this will be registered against your title and it will bind all subsequent purchasers, which may also affect saleability.

Common forms of land covenants include restrictions on the type of dwelling that you can erect on the land, height restrictions, the types of planting/landscaping that can occur and restrictions on your ability to further subdivide or the number of dwellings that may be erected on the land.

In summary

This article summarises some of the issues you may face when contemplating a subdivision or purchasing land subject to a subdivision. It is important that you properly inform yourself of the potential implications to avoid disappointment, delay or cost blow outs.

Our team is experienced in all aspects of subdivision and can help you to successfully navigate through the process. To speak to a member of our GQ Property Team click the button below.