How do you subdivide land to sell parcels to your neighbors?

Question

I am considering buying an investment property that has a small house and an acre of land attached. The shape of the parcel is very long and narrow, so the land isn't terribly useful except for keeping animals (like sheep or goats). The likelihood of finding a tenant that wants to do that with the extra land seems low, so the extra land is only a liability at that point. (There are plenty of trees that could fall on neighbors fences during wind storms for example.)

This strip of land borders four residential properties that are each located on a small (.193 acre) piece of land. If I subdivided the land, I could double the lot sizes for each of these homes and make a small profit on that land. Several of the neighbors have expressed great interest in doing this and each would get about triple the cost of that land back in increased market value on their homes with the larger lots.

I have a basic idea that I'll have to talk to the city and confirm that zoning, etc. will allow this, but if I proceed, what does that process look like?

Answer 1

There are several ways that I could have dealt with this problem, after meeting with the local city planners, we decided the easiest way was to amend the subdivision that the neighboring homes belonged to. If I was dealing with only one or two neighbors, it would probably have been cheaper to do a boundary line agreement with each one.

The process involved contracting a local engineering company to survey the land and mark the new boundaries for each of the four neighboring lots. The costs on this will vary widely, but I managed to do this for $2,700. I brought a copy of the plat to the city planner who was nice enough to review it with me and give me a list of changes that would cover the common objections that are raised by the various committees that have to sign off before it could be submitted to the city council. After making the suggested revisions, I submitted my plat amendment proposal and I paid the city $700 (because only five lots were affected. Other subdivisions with more lots would have cost much more both with the engineering firm, and with the city).

Next we printed several full-size copies of the 24" x 36" engineering drawing to take to the development review committee. Some places allow for digital submissions, but all the current city department managers prefer to work with paper for now. One manager asked for a .pdf, so that saved me $2. I had to attend that meeting in person to answer questions. There was only one minor change requested before the plat could be considered by the city council. I also attended the city council meeting to answer questions, at which point the subdivision amendment was approved.

The next step was to meet with the city attorney to discuss the title history on the land and provide proof that the property taxes were current on all the lots involved. I could have saved some time on this step by using a title company instead of undertaking the title work by myself. Unfortunately, there were some inheritance issues when I purchased the land, and it was too late to go through probate, so I also had to hire an estate lawyer to file a request for an order determining heirs which went through the local US district court. At this point, no title company would offer title insurance, so I was on my own to demonstrate to the city attorney that all of the correct procedures had been followed in that process (all of which took place before I began the subdivision process described above). I did subtract the legal fees from the purchase price on the land, so it only cost me a significant amount of time. ;)

Finally, I had the engineering firm print a mylar copy of the engineering drawing for all the owners to sign (in the presence of a notary) and delivered it to the city. A couple of months after the city accepted and submitted my plat for recording at the county recorder, I met with the recorder to fix a few problems with the mylar before it was finally recorded. (One of the owners had a trust, but didn't sign as trustee, the recorder wrote in the trustee designation next to the name before recording it.)

In all, I spent about $3,500 which I recovered from the sale of the land. If I had let a professional do all the work, it would have cost me $10,000. It wasn't that big of a deal, but I did put in a lot of time. I also got a pretty cheap education on some of the finer points of our legal system and the land development process. Apparently probate court sessions are usually quite boring, but I got unlucky (lucky?) enough to be on the same docket as multiple unexpectedly dramatic guardian/custodian hearings. My lawyer said he'd never seen anything like it in his 30+ year career.

Answer 2

In my state(Utah) you will have to contact your city or county planning commission. They all seem to have their own criteria and paperwork to do this.