Subdivisions & Development

You will be aware of the considerable capital gains that can be achieved by subdividing a parcel of land into a number of smaller lots and selling them separately. This may involve the creation of separate lots of vacant land from the original block, or strata developments that result in a number of strata lots such as home units or commercial units. This can be a very risky enterprise and accordingly land should not be purchased for the purpose of subdivision or development unless extensive research has been carried out to ensure that the relevant authorities will allow development of the land.

If you wish to purchase land for the purpose of subdivision or development you would be advised to include a "subject to development consent" clause in the contract. Such clauses must be carefully drafted so that you will have the right to pull out of the purchase if you cannot obtain your desired development consent from the relevant authorities by a specified date commonly called a "sunset date". The clause should also entitle you to rescind the contract and recover your deposit if the relevant authorities grant development consent on conditions that are unacceptable to you.

If you are contemplating purchasing land for subdivision or development then an alternative to a contract with a "subject to development consent" clause is an "option to purchase".

Typically an option to purchase will give you the right to require that the vendor sell the property to you on specified terms. You will be required to pay an option fee when entering into the option agreement. Generally the intention with options is that the purchaser will not exercise the option if they cannot acquire a satisfactory development consent for their intended subdivision or development.

Prior to entering into a contract or an option agreement to acquire land for subdivision or development you should consult the local council and surveyors and town planners experienced in the particular council area. Subdivision and development of land involves a unique mix of land law, local authority planning policy, and sometimes politics. It takes meticulous planning and financial studies if profit is the motive.

Subdivision and development projects commenced without sufficient research and consultation with experienced town planners, surveyors and consultants can result in heavy losses.

The Procedure

Generally in relatively simply matters of subdivision and development, the procedure will involve securing the land (whether by purchasing or acquiring an option to purchase), preparing your Development Application (normally with the assistance of town planners, surveyors, planning consultants and the like), lodging the Development Application with the local Council and then waiting for Council's decision.

Once Council has issued its determination in response to your Development Application then you will need to assess the conditions and decide whether they are acceptable to you. If the conditions are not acceptable (or if a Council refuses its consent) then you may need to consider the various appeal processes.

Once you have obtained development consent on conditions acceptable to you then, if you are acquiring the land by option, you must exercise the option to purchase, and otherwise carryout the development work and comply with Council's conditions. An appropriate plan (normally a Plan of Subdivision or a Strata Plan) and a Section 88B Instrument creating easements, covenants, restrictions on use and the like, must be lodged with Council.

When all of the development conditions have been met Council should sign off the plan and release it to you. It will then be necessary to have all interested parties sign off the strata plan including any financial institution that has a mortgage over the property as well as any tenants who have a registered lease. The plan is then lodged for checking and registration with the Department of Lands.

If the Department of Lands is for some reason not satisfied with the plan the Department will make requisitions against you or the surveyor. Once all requisitions have been satisfied and fees paid the Department of Lands will register the plan and issue new Certificates of Title for the newly created lots to you.