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The Real Estate Adviser

Know your (future) neighbors when subdividing land

Dear Steve:
I need some information on splitting a 30-acre parcel. I own the land and want to sell five to 10 acres. The property is located in northern Colorado. It could be commercial land or agricultural. Any information you could provide to help me would be great.
-- Yvonne

Dear Yvonne:
Oh, if it were only that simple to carve up and parcel off your own land in this great country of ours.

Depending on where you live, your path to parceling could be relatively straight, or it could be twisted, craggy and downright difficult to navigate.

You don't indicate if you are in or near a city, so it makes it a little tougher to fill in some of the blanks. But let's start with a few rules of thumb that apply to a "lot split" in most cities.

If you just want to sell off a chunk of land to an investor who's content to hang onto it for awhile, you can usually do so with minimal interfacing with local city or county taxing authorities, other than perhaps filling out a lot-split application.

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But if a buyer/developer wants to build something on the property -- be it a cul-de-sac, church or business, for example -- there can be numerous hurdles to jump over, or crawl under, as the case may be.

Developers will know what uses are permitted for the land and just how flexible cities are in changing zoning. If the property is zoned for agriculture, it's a little easier to get city planning and zoning commissions to rezone it for residential or commercial use. But if it is designated for commercial use, it's usually tougher to change it to residential use, with some exceptions. (That's because commercial users generally pay higher taxes.)

But before owners/developers will buy your property, they'll want to perform their due diligence, which usually includes surveying the land, securing zoning changes and even contracting land-planning and architectural services before they can be approved for a project by a city. Later, they may have to pay road-impact fees and pay for the construction of sewer and water services to the site, if the infrastructure is not already there.

Hence, they'll probably want to build as much density as allowable on the land to recoup their expenses. But I would guess you probably don't want a high-density, high-traffic use on your property's frontage. Ask lots of questions before completing your land sale.

Also, try to secure as much earnest money as possible if you allow a potential buyer to contract for your property, especially if there's a possibility the deal -- and your land -- could get tied up in zoning for several months. A good commercial real estate broker or experienced real estate agent can walk you through the steps and possibly have an alternate buyer lined up for you should your first deal crater.

See you at city hall, Yvonne.

-- Posted: Jan. 10, 2004

 
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