Why and How to Consider Subdividing Your Farm

Your farmland is your most valuable asset. It may have provided your family with a quality life for generations and may continue to do so for generations to come. It is therefore vital to ensure that you’re getting the greatest possible benefit from your land. Subdividing your farm could be a great way to help achieve this.

There are several reasons why you might want to subdivide your farm. It may form an essential element of your farming succession plan, allowing you to achieve an equitable handover to the next generation while providing you with security in your retirement. For example, you may wish to subdivide off the family homestead from the farm, or a surplus farmhouse that could be sold in the future. Or you may want to subdivide a large block of land into smaller portions to be distributed among the other members of your family. Subdivision could be the key to solving the potentially challenging problem of determining the future of the family farm.

Subdivision can also be used to make boundary adjustments, allowing you to reconfigure lot boundaries rather than creating additional allotments. This could improve the utility of the property, such as by realigning the parcel boundaries into a more usable size and shape.

You may also want to subdivide to create smaller allotments for sale, such as through the creation of lifestyle blocks. This could enable you to realize a return on a portion of the capital value of your property, while retaining ownership of your most productive land for your farming business.

If you are considering subdividing your farm, there are several steps to take in order to move forward. The first step is to find out whether the proposed subdivision is possible, what work would be required and what would be the cost. For this you need to engage a surveyor, who will review the proposed subdivision and liaise with your lawyer. You should also obtain tax advice on the implications of subdividing your land.

If you decide to go ahead with the subdivision, you will need to apply for resource consent from the council and engage the surveyor to complete the scheme plan. Finally, if consent is granted, you will need to complete any conditions of consent imposed by the council. The surveyor will then finalise the survey and liaise with your lawyer about what will be required for the title to be issued. You will then be able to complete the subdivision and reap the rewards.

Throughout this process, a lawyer will play an essential role. They will do things like review current interests on the title to see how subdivisions will affect them and advise as to whether titles should be surrendered or maintained. They will draft any legal documents required to satisfy resource consent, such as legal easements. They will liaise with you around any additional restrictions you should consider, such as land covenants. They can also liaise with third parties who may need to consent to the subdivision, your mortgagee to obtain mortgagee consent if required. Finally, they will apply to LINZ for issue of title.

Considering the importance of the role a lawyer will play in a subdivision, it is highly beneficial to engage a lawyer early in the process. Doing so will allow you to identify any costly fish-hooks before you spend a lot of money on the scheme, such as limitations on title or additional applications that may be required during the process and cost. Engaging a lawyer early could be a very worthwhile investment.

Subdividing your farm could provide you with great benefits, but it’s important to take the right steps to avoid any unnecessary risks or costs. So, if you are considering a subdivision, begin by reaching out to a good lawyer.

We’re offering free consultations with our experienced subdivision lawyer until the 30^th of November 2022. Book yours here:  https://protect-au.mimecast.com/s/zlSUC71G3rfw97h8aReC?domain=fitzrowe.co.nz/ or call Jessica Donald on 06 833 8500.