What Is a Severance Fee for Land Division?
Understand the role of a land severance fee, a municipal charge for dividing a property, and its place within the overall financial and procedural framework.
A subdivision fee is a charge from a local government when a property owner divides a parcel of land into two or more separate pieces. This process, known as a lot split or subdivision, is necessary to sell, mortgage, or develop a portion of your property independently. Increased density from new lots can place demands on public infrastructure like roads and schools. The revenue from these fees helps offset the public costs of expanding or maintaining these community resources to accommodate the new development.
Calculating Subdivision Fees
The method for calculating a subdivision fee is dictated by local ordinances and varies between municipalities. One approach is a flat fee for each new lot created by the division. For instance, a municipality might charge a set amount, ranging from a few thousand to tens of thousands of dollars, for every additional parcel. This method provides a predictable cost for the property owner.
Another method involves calculating the fee as a percentage of the land’s appraised value, often called cash-in-lieu of parkland dedication. Ordinances may require developers to set aside land for public parks. When this is not practical, the municipality will instead require a payment equivalent to the land’s value, ensuring funds are available to improve public green spaces.
The final fee amount is influenced by several factors. Zoning regulations determine the permissible uses and density of the new lots, which can affect land value and any value-based fees. The property’s location and its access to existing municipal services are also considerations, as properties requiring new service connections may incur higher fees. The size and number of proposed lots also impact the calculation, whether through a per-lot fee structure or by influencing the overall land value.
The Land Division Application Process
Before submitting a request to divide a property, an owner must compile a detailed application package. The main document is the application form, available from the local municipal planning or community development department. This form requires specific details about the property and the proposed division.
A requirement for the application is a recent survey or plat map prepared by a state-licensed surveyor. This document provides a legally recognized map of the property, showing its boundaries, dimensions, and any existing structures. The surveyor will create a new plan illustrating the proposed property lines, which serves as the basis for the new legal descriptions of the properties.
In addition to the survey, applicants must provide proof of ownership, such as a copy of the current deed. A detailed site plan is also standard, showing the new property lines and the location of proposed buildings, driveways, and utility connections. For properties not on municipal services, reports assessing the suitability for septic systems or wells may be required.
Submitting the Application and Paying the Fee
Once all supporting documents are gathered, the package is ready for submission. Municipalities offer several submission methods, including in-person delivery, mail, or an online portal. Upon submission, the planning department will issue a receipt, assign a file number for the application, and provide an initial timeline for the review process.
The timing for payment of the main subdivision fee can vary. Some jurisdictions require the full fee to be paid at the time of application submission. More commonly, an initial, non-refundable application processing fee is due upfront, while the larger subdivision fee is paid later in the process. This subsequent payment is often required only after the division has received conditional approval from the planning committee or relevant authority.
After the application is accepted, the applicant is informed of the next steps, which includes dates for public hearings where the proposal will be discussed. The file number assigned upon submission is used for tracking the application’s progress through the various stages of municipal review.
Other Financial Considerations in Land Division
The subdivision fee is only one component of the total cost of dividing land. Property owners must also account for the cost of hiring a licensed land surveyor. A surveyor is needed to prepare the detailed plat map that legally defines the new property boundaries, which is a requirement for any land division application.
Legal fees are another expense. An attorney is required to conduct title searches to ensure the property is free of liens or encumbrances that could complicate the division. Following approval, a lawyer must also prepare and register the new deeds for the newly created and remaining parcels with the appropriate land registry office.
Other costs can arise beyond professional services. If a proposal is complex or faces opposition, a property owner might hire a planning consultant to help navigate the approval process. Finally, there may be costs associated with fulfilling conditions of approval, such as minor road widenings or the installation of new utility connections.