Farmer Freddy gets proper advice before commencing land subdivisions

Farmer Freddy was sitting at the kitchen table with Pebbles, he had been looking through the real estate section of the newspaper.

“Pebbles, I have been thinking about subdividing a couple of sections off the farm.  I’ve seen some of my neighbours do a similar thing and they have achieved pretty good prices.  What are some of the key things I should be aware of?”  Freddy says to Pebbles.

“Well” said Pebbles, “I would suggest that you get a good team of professionals in place to assess your plans at an early stage.  You will need a surveyor, accountant, lawyer, and you will need to talk to the bank.”

“In particular, there may be tax implications in commencing a subdivision, so it is of critical importance that you take tax advice before commencing the subdivision.  If you only take advice once physical works are actually commencing, it may be too late.  In my experience, the earlier you take advice, the better.”

“Once those issues have been addressed, you will need to apply to the local authority for a resource consent.  The resource consent will record the basis on which the local authority gives its consent to the subdivision.  Any conditions which are recorded in the resource consent will need to be complied with.”

“Your lawyer will be able to review the resource consent and also the subdivisional plan which will be prepared by your surveyor.  Your lawyer’s input at this stage is of crucial importance as it is at this point that they can add value to the subdivision.”

“You will need to consider whether any land covenants are to be registered.  Some people like to set minimum standards for their subdivision by, for example, specifying the type of materials that can be used in new buildings on the land.  Similarly, you may wish to impose a land covenant which records a building height restriction or which prevents further subdivision of the land.”

“Easements may also be required.  If they are, then consents from your bank or other third parties may be needed.”

“Your lawyer will be able to prepare the land covenants and easements and will be able to anticipate the consents that will be required.  It is also important that all documents are soundly drafted in order to avoid any future disputes.”

“Your lawyer will then submit all of the documents to Land Information New Zealand which will issue new certificates of title for the subdivided land. They will then be able to assist with the preparation of contracts for the sale of the sections.”

“Thanks Pebbles” said Freddy,  “I knew you’d see me right”.

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document. 

If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser. 

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Jeremy Hucker