Part 1: Subdividing your property. Not as easy as 1-2-3!
Do you own a large property? Are you thinking about the possibilities of generating some much needed funds for your retirement fund, particularly as the rates and taxes and the cost of maintaining your large property is increasingly taking its toll on your finances?
Mr Jones has been enjoying his retirement, but his waning retirement fund has been of increasing concern to him. Mr Jones owns a large old property in the city and his nephew’s suggestion to subdivide this property and sell one portion of the ‘erf’ to his nephew, gets him thinking about the possibilities of generating some much needed funds for his retirement fund, particularly as the rates and taxes and the cost of maintaining his more than 2000m2 property is increasingly taking its toll on his finances. But what does such a subdivision entail and is it really that quick and easy? In this, Part 1, we look at the application process Mr Jones has to follow for the subdivision of his property.
Mr Jones, very excited and eager to transfer the proposed subdivided portion of land to his nephew and receive the proceeds of the sale, promptly pays his local Municipality a visit, only to be informed that this is a costly and lengthy process that is not likely to happen overnight as he had hoped for. If he decides to continue he will have to follow the following process to apply for the subdivision:
First of all Mr Jones should consider appointing the correct professionals to oversee the process on his behalf. This will stretch his budget but will help save time and money in the long run. Ideally, Mr Jones should appoint a town planner, land-surveyor and conveyancer from the start as they will greatly help to streamline the entire process and help Mr Jones steer clear of potential pitfalls that can easily be avoided, as well as providing him with a better understanding of the viability, estimated costs and time-frames for completing the process.
The first step for Mr Jones should therefore be to appoint a town planner who will be able to attend to the application process on his behalf by establishing whether the property can be subdivided, what the zoning rights of the property are and if there are any restrictive conditions on the property.
The town planner will request the title deed, power of attorney and bondholders consent from Mr Jones, all of which can be provided to the town planner by the appointed conveyancer. If the title deed has restrictive conditions, the town planner will need the mailing addresses of the surrounding properties that may be affected in order to provide them with a notice of the proposed subdivision. The town planner will advise Mr Jones on the minimum erf size of the area to be divided off and any other requirements such as floor size and entrances before subdivision can take place.
After providing the applicant with a quotation, the town planner will perform a site survey in which a layout plan showing all the buildings, servitudes and other pertinent information will be drafted, stipulating precisely how the land will be subdivided. Once the town planner has overseen the site inspection (between 1 to 3 days) and the site layout (between 7 to 14 days), instructions will be given to an engineering company to compile a services report. These engineers will then conduct a professional site inspection. Based on previous inspections and data available to a specific area they will calculate the bulk services contribution that must be paid by the applicant, additionally offering suggestions and finally compiling a services report. The report must be delivered to the town planner who finalises the site layout plan and readies the final application for subdivision (about 2 months) for submission.
The town planner will formally submit the preliminary application for subdivision, along with the following attachments, to the local Municipality and the Provincial Department of Rural Development for approval by the MEC:
- The prescribed application form;
- The formal application;
- The engineers’ services report,
- The site layout plan in duplicates (as required); and
- Any other documents that the Local Government may require.
The Provincial Government will confirm receipt of the application within seven days and the application will be circulated amongst the various municipal departments (water, electricity and storm water) for individual inspection, suggestions and comments - taking an average of 12 months to circulate. The Municipal Town Planner will then write a letter of recommendation which contains the conditions that Mr Jones will have to comply with and it will be forwarded to the appointed conveyancer, who will attend to the formal application process in order to help the applicant comply with these conditions.
In the case of any restrictive conditions that need to be removed, Mr Jones is compelled to provide notice to the general public by advertising the subdivision and the removal of restrictions in two local papers and the Provincial Gazette. Mr Jones must also give notice to all interested parties within a 100m radius. The public is then given an opportunity to object to the application within 21 days. In the event of any objection, the town planner will meet with the objector and determine whether their intention is to withdraw their objection or not. If not, the town planner will schedule a public hearing wherein both parties can be heard fairly. Based on both the findings and the applicants’ written confirmation to comply with the conditions as set out in the Municipality’s letter of recommendation, the Municipality will decide whether to recommend the subdivision to the Provincial Government or not.
If the recommendation is approved, the Provincial Government will issue a Letter of Approval for Subdivision, wherein they will set out any further conditions along with a time frame of 24 months in which the registration process must be finalised.
In Part 2 we will discuss in more detail the process of registration of the subdivision.
Disclaimer:
Please note that this article is a generalisation on the course of action taken during uncomplicated subdivision applications and these requirements, timeframes, costs and processes may differ for various Provinces and Local Governments. If considering a subdivision, it is advisable to contact a conveyancer to assist you with specific queries or applications and for a referral to a town planner, land surveyor and engineer that can assist you in managing your proposed project efficiently and cost effectively.
Source - Miller Bosman Le Roux