My Backyard Subdivision - Part 3: Titles and Boundaries
In the last article in this series we looked at buying the property that you want to develop. When buying you do not want to fall into one of the property development traps - in this case paying too much for the property because you have not done all your homework
If the property is going to be difficult to develop, or your plans will be hindered, due to the size or zoning of the property, then that will erode your potential profit.
If the first most
essential member of your development team is your real estate agent, then
The first step in this is to have a precise idea of the size and nature of the property.
Surveying is about the appearance and impact on the environment, street and neighborhood, as well as protecting the local amenity. The building permit process is about meeting the standards of construction. Your team involved here is surveyors, engineers and an architect/draught person.
You cannot assume things like fences, wall and buildings are actually all on your title. For most properties the boundary pegs will have long gone. The seller does not have to have boundary pegs on the property unless the property is bare land. So one thing to establish, preferably during due diligence, is just were the legal boundaries are.
This is the first thing a surveyor will establish - where the boundaries actually are and the existing features of the property (which the house designer will need to know later). The surveyor can just show you where the boundary is or give you a “topographical” report which is more detailed.
A topographical report is very useful to show Council, engineers, designers and neighbours so they know the actual features of the property.
What happens if the boundaries are out?
This very problem happened with my own backyard subdivision. I intend to have driveway access between the existing houses through to the back section. The access was already too narrow for a right of way, so the exact legal placing of the boundaries is important.
If there is a problem what can you do?
The short answer is if something is wrongly placed over the boundary, you cannot legally continue to use it unless you get some agreement with the neighbour (and that would need to go onto the title to bind future buyers of the property). If you can’t get the neighbour’s cooperation and agreement, you will need to get a Court to decide what happens - the Court has a wide range of power to give compensation or change the boundary depending on how, when and why the problem arose – but that will be very expensive. If you cannot do either of these, then potentially you will need to move structures, walls, etc if they are over the boundary.
Getting your surveyor to give you a concept plan will also help you work out just what you are going to be able to do on the property. Building rules require for example:
- Turning circles for cars - in some areas you cannot back out of driveways. Is there enough room?
- Where formed access is required - what width and engineering is required? There are different rules for rights of way.
- How stormwater and drainage will be handled? You need to know where existing water and sewerage and stormwater services are (this is shown in the LIM, or the Council GIS website if the Council has this information).
If Consent is required from neighbours to, for example, connect to services (drains), or to allow buildings to be closer to the boundary than the planning rules allow, then this needs to be done early on and if reasonably possible to be avoided. Council will require a signed “affected parties form” (available on Council website). Without this you do not have consent.
You also need to know what impediments might be on the title. Here you will need to get a lawyer to report on the title. What can affect your development on the title?
Council regulates environmental management requirements by way of the district plan and Consent Notices. These are registered on the title - they may dictate what has to happen if a subdivision is proposed and rules about how the development can proceed.
Easements and Encumbrances - these might be for access to the site for right of way, power, water, sewerage. You will need to get a report on how this will affect your subdivision and if they do what is proposed to comply. Generally with this sort of documents it can be next to impossible to get this changed. You need to know who has a right to use these if they are on your title and how this could affect your development.
Covenants put restrictions on the title - the most common is obligations about whether neighbours must contribute to fencing or not. Covenants are binding agreements about how the property can be used and need to be checked. Covenants limiting building size and type are now also common. Covenants can also protect trees or bush that cannot be touched - if there are trees on the property to develop Council has a list a trees you cannot remove on their website.
Building line restrictions set out how far back from the street the house has to be - if the new house is at the front you need to check that.
A number of titles in Whangarei have old mining rights. These are generally historical only and remain on the title because it can be just too difficult or not possible to get them off. They need to be checked though.
There can be restrictions on building on the title that require extra engineering (= cost) be of potential subsidence or other hazards.
There can be Council reservations can reserve on the title various requirement that have to be met first before subdivision - often to ensure adequate access is provided.
Showing the concept plan to you lawyer will mean they can assess what difficulties will come up and how best they can be dealt with. Getting onto them earlier will mean there is less opportunity for problems later on. Successfully development mean getting all of the various experts in their own area – surveyor, engineer, lawyer, Council, designer working on the same page. You will need to project manage all of these experts to work both in a timely manner and together.
My Backyard Subdivision – Ten easy steps to property development nirvana
Property development is a great way to add value to your property. A backyard subdivision (dividing one property into two or three titles) is straightforward if you know what to do, who should do it, and more importantly in what order things are to be done!
My Backyard Subdivision - Part 1: The Essentials of Feasibility
Before investing in your idea, test if there is actually a market for what you are selling.
My Backyard Subdivision - Part 2: Purchasing Your Property
In my last article I talked about why you should first establish the feasibility of your project. This week I discuss the actual purchasing of your property.