Everything You Need to Know About Subdividing Your Land

by | BiggerPockets.com

When you say the word subdivision to most people, it will most-likely conjure up images of large tracts of suburban style housing. And while huge housing developments are one type of subdivision, there are also much simpler forms that even the novice real estate investor could contemplate doing. Knowing what a subdivision is and how to potentially go about doing one could be a profitable tool for any real estate investor.

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What is a Subdivision?

Subdivisions are rather simple when you get right down to it. A subdivision is taking of one tract or piece of land and dividing it into two or more tracts of land. A subdivision could involve tracts of land that range in size from hundreds of square feet to hundreds of acres. A subdivision can also only involve only one or hundreds of new tracts.

Legally, however, the definition of a subdivision is going to vary from state to state and from location to location. These legal definitions are important, because they will also define the rules that one must follow to legally complete a subdivision. There is no standard legal subdivision across the United States. If you are thinking of subdividing land, you are going to have to look into your local rules to find out what that definition entails.

For example, here in Tennessee, any division of land over five acres is not considered a subdivision — unless you are in Shelby County where the standard drops to four acres — or if you are installing roads or utilities then size will not matter.

As you can see, it can get complicated quick, so it is best to ask what your local rules are. In general, if you are creating small lots and building a road or installing utilities, you will fall under the legal definition of a subdivision.

Why Subdivide?

The main reason people subdivide their land is to sell off a portion of it. You may, for example, want to sell a part of your land to a family member so they can live close by. Or you may want to create lots to build new a housing or commercial development. Whatever the reason, subdivisions create new tracts of land. That is why people subdivide.

How to Subdivide

No matter where you are, the beginning of any subdivision process is going to begin with a description of the land being subdivided. I do not mean an illustrative description. I mean a legal property description. A description that legally defines what the property boundaries are. This is so you legally know what it is you are trying to divide. Look at any deed and it will have a legal description on it. Every piece of land in every corner of America has a legal description recorded somewhere. Most can be found down at the local courthouse. It is with this description that you begin any subdivision process.

Related: Subdividing Land: A Primer for Real Estate Investors on Process, Legality & Costs

Next, check your local regulations. There are two things you want to check. One is zoning, and the other is subdivision regulations. Your area may or may not have these regulations, or they may be called something completely different. No matter what they are called, these regulations are specifically designed to regulate the subdivision of land.

If you find that no regulations exist, as may be the case in many rural areas, you can simply write up a legal description of the area you wish to subdivide — often using the legal description described above, place that description on a deed and have it recorded at your local courthouse. That is it, subdivision complete.

If, as in many urban areas and towns, there are zoning and subdivision regulations, then you have to follow their provisions in addition to drawing up a deed.

Check the zoning first. The most important thing to look for in a zoning ordinance is the minimum lot size. If the land you want to subdivide is zoned for one acre minimum lots, you are not going to be able to subdivide into 10,000-square-foot lots. To do so necessitates a rezoning, and that is a deferent game entirely that is discussed here.

If you find the zoning will permit you to do what you want to do then you need to turn to the subdivision regulations.  These regulations as you may have guessed will spell out the legal requirements to subdivide your land.  These regulations must be followed before any land can be divided and sold.  Sales can be voided if the regulations are not followed.

Related: 3 Upgrades That Add Little to No Value to Your Investment Property

Most likely you will have to develop what is called a plat. A plat is a map of your subdivision, drawn to scale by a surveyor or engineer. It will show how the various lots or tracts you propose, along with any streets and utilities, meet the requirements of the local jurisdiction.

This plat is often reviewed and approved by local planning staff and an appointed planning commission. Once your plat is approved and recorded at the local courthouse, then you can write deeds and sell of the new tracts. The whole process can take anywhere from a few weeks to years depending on the jurisdiction, their regulations and the complexity of your subdivision.

This is a very basic description, and a subdivision can get very complicated very quickly. Remember to check with your local planning commission or building department. Simple two lot divisions can often be handled quickly and easily, but building roads or trying to make dozens of lots will require a lot of professional and technical help.

I spent years making the rules and reviewing these types of things.

So if you have specific questions about the subdivision process, ask in the comments below!

About Author

Kevin Perk

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.

6 Comments

  1. David Krulac

    Kevin,
    Nice basic article.
    I wish it was that easy, I used to live in TN, but never did any subdivision there, my loss if its as easy as you say. but I have don’t multiple subdivisions in multiple states and it was never that easy. Here in PA, even a 2 lot subdivision requires a formal plan and in some case both a preliminary plan and a final plan, Where there is not public sewer hook up available, there is the requirement for perculation (perk) testing. On one tract of about 100 acres, we ended up doing 200 perk tests.
    For a typical plan of more than a couple lots, I project a year to get all approvals. Besides the local municipal government, there are permits from outside agencies required like:
    Highway Occupancy permits
    Driveway permits
    Endangered Species review
    Flood plain review
    Wetland review
    Hydrogeological study
    Stormwater control study
    Historical Study (did sometihng historic happen here?)
    and others.
    I might be moving back to TN!

    • Kevin Perk

      David,

      Thanks for reading and for sharing your experiences.

      The ease of the subdivision process certainly depends on your local regulations.

      In the metro areas of Tennessee such as Memphis, Nashville or Knoxville, the process can be long and difficult like you describe. But, in the county just next door a simple two lot subdivision can be approved administratively in less than a month.

      A year is a pretty long time though. But in certain areas of California and Florida, it can take even longer.

      Thanks again for reading,

      Kevin

  2. Matt Torcasso

    Thanks Kevin,

    I live in NC and have two separate adjacent plots, but want to re-allocate some land from the larger plot to the smaller one. Is that also considered a subdivision? I’ve been doing some research on that but having a hard time finding good information on next steps.

  3. david neese

    Kevin, I don’t know if I told you about the land I am developing where the seller didn’t disclose a graveyard from the 1800’s. We had fun getting ground penetrating radar and someone with a divining rod to help us find the boundaries. Some of the land in Tipton County we are going to split into 5 acre lots and sell to avoid having to make it part of subdivisions.
    Also developing lots in Millington.

    It was good chatting with you about the soil differences between Fayette and Tipton Counties. I am glad I have better soil to deal with.

    • Kevin Perk

      Hi David,

      Thanks for reading!

      As you discovered, graveyards are heavily protected in Tennessee, as I suspect they are in most states. Plus, they can be small and forgotten! There are however maps out there that show where many of these old and now overgrown graveyards are. Ask the planning department next time. Btw, If you are ever in Midtown Memphis, check out the small graveyard next to the Home Depot. It contains the graves of some of the first settlers of Shelby County and it is just a tinly little plot surrounded by all that urban development.

      Also, thanks for bringing up the subject of soils. They can be very important as you say and as David Krulac mentioned above with perk tests (nothing to do with me!). What it has to do with is septic systems in areas where there is no sanitary sewer service. Basically, septic systems consist of a tank for solid waste and drain lines for liquid waste. For those drain lines you need the right types of soil so they will drain. Some sandy soils are excellent, other clay soils are not so good. Clay soils can almost act like concrete in the winter and liquids are not going to drain well in concrete. Instead those liquids begin to back up. Right into your home.

      So when subdividing land, many regulations require enough “good” soils for septic systems. Here in Tennessee a state permit granted after a soil survey, but could be locally done elsewhere. Soils can vary widely. In a very short distance as you describe, minimum lot size can go from one to five acres depending on the types of soils available. So word to the wise if you are subdividing in rural areas, soils can make a big, big difference.

      Thanks again and good talking to you as well,

      Kevin

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