Subdividing or Consolidating Titles: Frequently Asked Questions
An increasing number of individuals and entities are looking to deal with property in a variety of ways. This includes either subdividing or consolidating their previous title(s) in order to create new parcels of land. Below are some of the more common questions that we are asked on a regular basis:
Question 1: How are titles subdivided or consolidated?
This process has become increasingly digitized over the previous 10 years. Most plans of subdivision or consolidation will be lodged with Land Use Victoria using the electronic platform SPEAR. This platform enables your surveyor, local authorities (usually Council and service providers such as Water Authority) and your solicitor to upload all relevant documents for assessment with Land Use Victoria. Once all documents have been uploaded, your solicitor will usually be the party that will lodge the application via SPEAR with Land Victoria.
Once received by Land Victoria, an application can generally take anywhere from a few days to a month to be reviewed (provided no requisitions are received and your application is not considered niche such as an adverse possession application). You do need to be a subscriber to SPEAR in order to access it so if you are planning to change the boundaries of your property in anyway, you should seek advice as to where to start.
Question 2: I have a mortgage on my title, will this impact my plans?
The short answer is yes. Your mortgagee will need to provide consent and make the title(s) available to Land Victoria to enable them to either subdivide or consolidate the parcels. Most consents are processed in a time period from seven (7) business days to one (1) month depending on the complexity of your proposed dealing. In some cases, the banks may need to complete valuations to determine how the proposal will impact their mortgage over the property. If you are dealing with a Not in Common Ownership (NICO) plan, this consents process could take a considerable amount of time (as banks generally do not prefer these types of plans as they may impact the mortgagee power to sell the property).
Question 3: Is there a fee payable for subdividing/consolidating titles?
In addition to surveyor and professional legal fees, there are also government fees that are payable when lodging a plan of subdivision or consolidation. These fees are generally worked out on the basis that a base fee is payable and then each separate parcel created yields an additional fee. Therefore, if you are planning to subdivide land into many parcels, this fee could easily range into the thousands of dollars. You should discuss an estimate of this fee with your advisors prior to commencing any development plans.
Question 4: Do I need a planning permit to subdivide land?
In the vast majority of these types of dealings, you will require a planning permit to be issued. You should discuss this with your surveyor so they can:
- Advise on the costs and process for obtaining such a permit;
- Advise on whether your proposal is in line with the planning scheme and applicable planning overlays; and
- What may occur if your proposal is rejected, including whether any other impediments such as registered covenants on title may impact your proposal.
In many circumstances, this process is not quick and you should factor in delays to your timeline.
Question 5: Do I need to obtain financial advice when subdividing/consolidating titles?
Absolutely! Whenever you are dealing with land or the change of boundaries, you should definitely obtain accounting advice. This concerns tax advice, such as CGT and GST as well as broader financial advice about how your proposed development may impact your finances. This should be done at the start of the matter to ensure you understand all aspects of the transaction before receiving unforeseen tax assessments.
Question 6: Does the lodging of a new plan of subdivision change ownership on Title?
In most cases, the answer will be no. Instead of having one larger lot owned by an individual or entity, that lot is just carved up into smaller pieces (with the external boundaries remaining the same). In some more obscure cases, the new plan of subdivision will be lodged over the top of two previous plans, resulting in a sliver of land being temporarily owned by two or more entities. If this occurs (usually due to a NICO plan being lodged), this will then require a complex duties assessment and lodgment with Land Victoria to “rectify” the double ownership, so each lot owner has their own title. Your surveyor should be able to advise at the outset of the matter what type of new plan is being proposed for your development.
Question 7: Can I sell the proposed new parcels of land without the plan having first being registered?
Yes, this is commonly done and referred to as “off the plan sales.” Essentially, your solicitor will need to prepare a specific form of Contract and Vendor’s Statement that confirms that the property being sold is not currently on a registered plan. The Contract will include various mandated conditions that often are designed to balance the need to protect purchasers (given the often lengthy delays between signing contracts and settlement) with the need for Vendors to have some flexibility in completing their development.
Further, various documents must be included to enable prospective purchasers to identity exactly what they are buying. There are stringent disclosure requirements under the Sale of Land Act 1962 (Vic) concerning off the plan sales and so if you are intending to do this, you should seek advice from an experienced property lawyer to guide you through the process and to avoid unforeseen breaches of legislation.
If you have a subdivision or consolidation enquiry or would like further advice concerning the development process, please do not hesitate to contact us at Johnstone and Reimer Lawyers on (03) 8658 0040 or book in an appointment online with a property lawyer for a free initial chat.