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Two into one will go. An overview of land subdivision

25 July 2016

Harris Tate director and Tauranga Property Investors Association president Grant Harris says if you are thinking of subdividing it is vital you are aware of all the potential implications of a subdivision. Here is his anaylsis in the latest edition of The Ultimate Property magazine (winter edition 2016).

What is subdivision of land?

A traditional subdivision may be considered the creation of two or more new freehold titles from one existing title. However, there are many other types of activities, constituting the subdivision of land, including the conversion of cross-lease titles to freehold titles, boundary adjustments, unit title developments (such as an apartment development) or even amendments to a cross-lease or a unit title to show alterations, additions or accessory buildings.

What are the criteria for subdivisions?

It is important to note that each local authority has different rules and criteria for the subdivision of land. The main variable for a property subdivision will most likely be the size of the site. The minimum site size for subdivision will vary and depend on local authority zoning for the property (residential, rural, industrial) and the maximum permitted density of dwellings in that zone.

Other variables will include the property's physical features or constraints and the ability to provide services (such as power, water and sewerage) and safe access to the site and appropriate car parking. In Tauranga, all subdivisions will require resource consent under the Resource Management Act 1991 and The City Plan contains the Council's rules regarding subdivision.

Who is engaged as part of the subdivision process?

In addition to the local authority and planning requirements, input and advice will be required from a surveyor and a lawyer with scheme plans and titles processed through Land Information New Zealand (LINZ).

What are the steps involved in subdivision?

Firstly, apply to the relevant local authority for subdivision consent. As mentioned above, a subdivision will need to meet resource consent land use requirements and the rules in the district plan regarding what types of subdivision activities are allowed in the zone the land is located in.

A Lawyer and Surveyor are engaged prior to making the application in order to:

(a)            Review the certificate of title for the land and advise on the effect of any interests registered on the title;

(b)            Check the rules, policy and zoning requirements in the district plan;

(c)            Investigate any topographical or physical constraints of the land;

(d)            Engage specialist engineers or consultants for any necessary specialist reports that could relate to, for example, geotechnical, soil condition, foundations, access or traffic impact assessment;

 (e)           Investigate existing services (such as power, water and sewerage) and what services will be required; and

 (f)             Prepare the draft scheme plan after inspecting and measuring the proposed subdivision site.

The application is then submitted to the local authority with the scheme plan. For a simple subdivision 20 working days is the standard timeframe for a response from the Tauranga City Council, but that can be extended if the local authority request further information.

Second, a successful application will comply with the district plan and the local authority will grant consent, usually subject to conditions.  These conditions relate to things that must be done as part of your subdivision to satisfy the local authority's requirements.

In most cases, you will also be required to pay development contributions as part of your consent. Development contributions are financial contributions towards infrastructure and can be significant amounts. These should be factored into the budgeting for a subdivision.

You should provide your lawyer and surveyor/planner with a copy of the consent and they can advise you on the effect of the conditions. There is a 15-working-day timeframe from date of consent to object to the local authority if you have concerns regarding the conditions imposed. 

The next step is to complete the conditions imposed by the local authority for a Section 224(c) Certificate, which generally involve the physical works for driveway, curbs, drainage and the installation of utilities and services and the registration of legal documentation by the lawyer. 

These could include, for example, easements, rights of way, consent notices, or land covenants that continue to apply to some or all of the titles once subdivided. Land covenants are common with large residential subdivisions to restrict the type of building and activities within the subdivision development. However, they add value by maintaining the developer's desired standard of the subdivision.

The local authority will issue 224 certification once conditions are met and development contributions are paid. This approval enables Land Information New Zealand to issue new titles (see below).

It is now time for your surveyor to carry out the formal measuring of the subdivision, pegging of boundaries and preparation of the land transfer plan (the LT plan), which will also contain easements, rights of way, roads or reserves if any are required under the conditions of the subdivision consent.

The surveyor applies to the local authority for approval of the LT plan, known as a Section 223 Certificate, which confirms that the survey plan is in accordance with the resource consent. Often the applications for the Section 223 and 224(c) Certificates are filed at the same time. Once you have these certificates, these can be lodged with the LT plan with Land Information New Zealand for registration.

Lastly, your lawyer prepares and finalises the legal documentation so that once the Section 223 and 224(c) Certificates are obtained an electronic dealing is set up and processed on the LINZ network to register any easements, encumbrance, land covenants and register or discharge any other interests required for the new titles and order new titles.

The LT plan, section 223 Certificate, section 224(c) Certificate and all documents referred to above are generally lodged together for LINZ to process with a fast-track request (which generally means a response from LINZ within 10 working days).

Once LINZ grants approval, the LT plan deposits and the new certificates of title are issued.

Useful Tips

Speak to the relevant local authority early to get its input on the proposed development so they can provide guidance on any parameters or potential issues from the outset. Also, good communication between the lawyer and the surveyor is essential throughout the process to ensure that the legal documentation is prepared and signed by the relevant parties to be received by the lawyer in time for issuance of the section 223 and 224(c) Certificates for timely lodging with LINZ to ensure no delays occur with the issuance of the titles.

(Article published in The Ultimate Property magazine winter edition 2016)
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