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#1
Old 06-10-2010, 02:49 PM
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Subdividing some farm land: How much of a headache is this?

So I am looking at some agricultural property in Missouri that I and a couple of other families are interested in purchasing. We are thinking about subdividing the current property into different parcels for us each to live on. Obviously all of this needs to be surveyed, approved and registered with the county / state (?), right? We also need to plan out access and make certain that issue gets legally nailed down so if someone has a snit with someone else (yes, I am a realist), they can't tell someone else they can't cross part of their land, or some other petty thing they might be legally within their rights to do.

I'm new to this kind of thing, having lived in the suburbs all my life where the house and land was one package deal, already cookie-cutter shaped for the purchaser by the builder.

The GQ question is: What do I need to do, exactly? Can we all pool our down payment in a trust fund, make the purchase, and then divide things up and dissolve the trust, each walking off with their own portion of a down payment for their specific parcel? Can we subdivide prior to purchase, thereby allowing each individual to immediately move right into their own mortgage? How expensive is this all going to be?

And on a less GQ basis, can you give me any advice on this kind of group purchase? Do people do this kind of thing? And how well does it work?
#2
Old 06-10-2010, 03:03 PM
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Keeping in mind that I know absolutely crap-all about this sort of thing, one thing that pops into mind is that there's a town near me that won't allow lots to be less than five acres, so as to maintain its spread out rural feel. So a first step might be to contact the town or county and see if they allow what you're planning.
#3
Old 06-10-2010, 03:27 PM
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It's definitely do-able, one way or another.

What you need to do is get a real estate attorney.

They can do all your paperwork and help you figure out the best way to do this.

You're really going to need a lawyer for this.
#4
Old 06-10-2010, 03:46 PM
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Location: Missouri
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It's really not that hard, and I personally don't think you necessarily need a lawyer, but if it makes you more comfortable, go for it. Are you dealing with a realtor? Might be helpful in this situation, or at least talk to the title company doing the closing about the joint-purchase thing.

We've subdivided land before--34 acres into 8 lots, which cost (in Arkansas about 4 years ago) about $4K, IIRC. So that's a ballpark for you. You'll need access easements, which are kind of neutral pathways to access the back lot(s), which takes care of future conflicts. The surveyors will include these at your request. Be sure they're wide enough for utilities, and find out what the utility companies require first.

You do need to check with the county or town about subdivision restrictions, just call the town planning office or whatever its called in your area and ask them.
#5
Old 06-10-2010, 03:55 PM
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I was going point out find what the ordinances are on subdividing land. There are minimums in size and other restrictions by local government.
#6
Old 06-10-2010, 04:06 PM
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I speak from personal experience (though this was in regards to inherited land that was horribly mismanaged by the executors).

If you don't do this RIGHT, it could be a mess of epic proportions. Land that has been improperly subdivided can be land YOU CAN'T USE nor can you SELL. If you just want some land to look at, thats fine. If this land cost more than your "fun money" budget and you'd like to do something with it, not so much.

Get plenty of advice and pointers and pro's and con's and considerations here. But, IMO, when push comes to shove get an EXPERIENCE PRO once money starts changing hands.

Trust me on this ..."our" 35 plus year old shit fest saga is STILL going on.

Last edited by billfish678; 06-10-2010 at 04:07 PM.
#7
Old 06-10-2010, 04:08 PM
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Location: Colorado Rockies.
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In Colorado, you would need to get the County Planning department involved for any type of lot split/subdivision. There could be zoning or minumum lot size restrictions. For instance, I own 40 acres and the subdivision codicil (? can't think of the word) won't let us split it up.
#8
Old 06-10-2010, 04:17 PM
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Location: NYC
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Since this is a group thing (dare I say Co-op?) and not one person doing the buying and subdividing, I imagine there will be much haggling over boundaries and the final price of each parcel. You're not going to be negotiating with a real estate agent and an unseen seller, you're going to be negotiating with each other. I can't imagine it being an even split. You don't want the whole thing to collapse if someone pulls out. I think someone will end up having to take charge and that might require some type of compensation (that someone else will grumble about having to pony up).

Last edited by mack; 06-10-2010 at 04:22 PM.
#9
Old 06-10-2010, 04:25 PM
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Your first step should be to get hold of the relevant (county and/or township) subdivision rules and study them carefully. It would also make a lot of sense to find some examples of recent successful subdivisions similar to what you have in mind, and to take a look at the paperwork that was filed for these.

A good place to start would be the county land planning office (name may vary - often co-located with the Registry of Deeds, in the county seat).
#10
Old 06-10-2010, 04:35 PM
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Definitely definitely talk to the local planning office YOURSELF first.

Particularly in a small town, the same proposal from two different people could have two entirely different outcomes.
It's well worth the time to scope it out yourself first and to ensure that all the subdivision agreements are in place before you finalize the sale.
#11
Old 06-10-2010, 04:50 PM
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Get a real estate attorney. This will insure that when one party down the line wants to sell their property later, title's aren't properly done. There may also be laws regarding egress and access to sections of the property that aren't bordered by a public road. Some sections may have to grant easement or right-of-ways across their property to bordering property.

All do-able, but worth the cost of a good attorney to preserve the value of each persons share later on when they might want to sell.
#12
Old 06-10-2010, 04:58 PM
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I think you would be absolutely nuts to NOT have a lawyer. Funny things happen when more than one person gets together to do something in which money or property is involved. Two good friends who would never dream of dealing wrong to the other can often find themselves in a situation where they have a falling out, or one party dies and his or her heirs don't have quite the same egalitarian attitude. For example, there is currently a thread in this forum about dissolving a company so that one party can go off and build the product independently.

Get a lawyer. When push comes to shove, the other side will have lawyers.
#13
Old 06-11-2010, 12:09 AM
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You are going to be better off if you get a lawyer.
You have two ways of doing this.

Work with the seller and get the property sub divided first before selling.
Or possably form an LLC purchase the land. Then sub divide the land, sell the new sections to the members of the LLC, then disolve the LLC.

There is a difference between dividing up a piece of property and sub dividing. If you are dividing up the land with all the right aways in the deeds, it is a little work. But most counties or cities require inprovements when sub dividing. Roads may have to be built. Utilities (water, gas, electricity, maybe sewers) may be required. You are going to need to know what the zonning classification is. Min lot sizes. What the restrictions are. How does the planning commision work.

If you form the LLC do not use a real estate lawyer.
#14
Old 06-11-2010, 01:13 AM
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Where in Missouri? What county? Is it in an incorporated city?
What is the size of the parcel?
What is the parcel zoned? Not the current use, but the actual zoning. What about the zoning of surrounding parcels?
Was the parcel the result of a previous subdivision or lot split? If so, when was that platted? (Many counties will not permit splits of parcels created after a certain date, usually after the enaction of the state's subdivision enabling act or local subdivision regulations, or allow them only with the same full review process that large subdivisions must go through.)
How many lots do you intend to create?
Is sewer and water service available at the site? If not, how far away is it?
Are there any existing easements?
How wide is the road and right-of-way adjacent to the site?
Were the development rights purchased by the county, a farmland preservation trust, or other body?

Don't get a lawyer. Get a local engineering and surveying firm that has a planner on the staff, preferably one that is AICP certified.

Last edited by elmwood; 06-11-2010 at 01:15 AM.
#15
Old 06-11-2010, 02:02 AM
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Another aspect of this is to work out before you buy how you are going value each of the subdivisions and how you decide who gets which.

Each of the subdivisions will be different sizes. One block will have better water access, or better quality soil, or more capital improvements.

All best to get a valuer involved early in the process.
#16
Old 06-11-2010, 02:15 AM
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In conjunction with Elmwood's notes, before you spend a dime on anything, assuming this is county ag land without municipal water and sewer access you will be reliant on well and septic for water and sewer. To have land that can be used in this fashion the soil has to "perk" or drain at an acceptable rate for the sanitary sewer system to work. Beyond this EACH house parcel in the subdivision you propose has to have a sufficient perk for a residential lot. This can be several acres or more per lot depending on the drainage characteristics of the soil and zoning requirements. Some lots may not perk at all due to clay layers or others hydrological issues.

Buying raw land because it's a "deal" is one of the stupidest things you can ever do without sufficient due diligence.

Last edited by astro; 06-11-2010 at 02:17 AM.
#17
Old 06-11-2010, 10:46 AM
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Get this all straight and documented now. My family is dealing with a situation where co-owned farm land was willed to co-owners, then willed again to more co-owners. Now nobody can build there because we can't figure out how to divide it up. Many dollars for lawyers and surveyers in our future.
#18
Old 06-11-2010, 04:00 PM
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There is some fantastic advice here, and it has helped me clarify a lot of issues I need to think about. Thanks!
#19
Old 06-12-2010, 12:37 AM
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Yes, there have been a lot of good suggestions here. Lawyers are all well and good, but make sure you've got someone helping with this that actually deals with farmland subdivisions. Here are some of the issues you need to address:

1) Each parcel will need its own operating well. You will need to test-drill some holes and calculate flow rates.

2) If you'll be doing any farming whatsoever--or even leaving the option open for you or the person you eventually sell your parcel to--then water rights are absolutely critical. What's the source of your irrigation water? If the current parcel is part of a ditch co-op now, will each parcel require its own headgate? Can the shares in the ditch company be split up? Where will the water drain? Will drainage from one parcel flood another one?

(If this is dry farmland, then #2 doesn't apply)

3) Are there flat building sites on all of the individual proposed parcels? If one parcel requires ten times as much driveway or access road as another, will everyone share those costs equally? How about access road right-of-way? Is there a shared access road that will require maintenance? Who pays how much?

4) Septic systems require leach fields, which require percolation tests. Is there enough space for the leech fields without interfering with the neighbor's wells?

5) Who is responsible for fencing between parcels? What if one party wants a fence and the other doesn't? What if one party wants an expensive wooden or stone fence and the other wants barbed wire?

6) Does everyone agree on land use? Will one of the group be running cows while another gets annoyed by the smell and noise? Will one let the land grow natural while the neighbor tries to cultivate it (this leads to weed arguments and dust arguments)?

7) For the subdivision itself, are you shooting for parcels of equal SIZE or parcels of equal VALUE? If the former, how do you decide who gets the more desirable parcels (e.g., better view)? If the latter, who appraises them?

8) How are mineral rights divided? Are there restrictions of use of mineral rights? Can one neighbor put an oil well on his parcel? Dig a gravel pit?

9) Will you be connecting to the grid? If so, what's the nearest connection point? Will everyone share equally in the cost of getting power to the parcels, or will the person farthest from the connection point pay more? Will you be considering putting in wind or solar power? If so, will it be shared? How?

10) Is there natural gas available? If so, or if it becomes available in the future, will there be a defined right-of-way for running the pipeline to each parcel, or will it have to follow driveways and access roads, which may lead to much more pipe and correspondingly higher costs?

11) Does the property bisect a county line? City limit? School district? Tax district? Any of these opens a can of worms or two.

12) Would building a house on the prime building site of one parcel wreck the view from a house on the prime building site of another parcel?

13) What if you have a shared access road and some of you want to pave it and some want to make it gravel? Who decides? Who pays?

Since you've said this was ag land, I'm presuming that you're planning to continue to use it as ag land. But if you're just living on some nice land without using it for agriculture, you'll really want to make sure you all envision the same living environment. As much as I dislike homeowners associations, you might need to create one. Think about whether it's okay if your neighbor is discharging firearms on his property. Or if he wants to keep peacocks and roosters. Or if you consider the native fauna to be cute woodland creatures and he considers them pests to be eradicated. Are you all of a mind concerning storage of RVs, boats, horse trailers, and farm equipment on the property? If you're sharing an access road, will it be gated?


This undertaking is not as casual as you might think.
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