CBA Rejecting Consent to Subdivide Land into 4 Blocks

We are 4 individual owners who bought an old house on a larger piece of land in 2015. The intention is to subdivide into 4 seperate lots with each owner having their a block in their individual name to build a unit on each.

We knocked the house down in 2018 (note without CBA consent, we weren't aware this was required at that time) and thinking we had everything in place (WAPC, house designs, etc.), went to get consent from CBA to subdivide however it was rejected. This is after a lot of to/fro-ing between our broker and CBA credit variation team who kept asking questions (easement / party walls & common driveway) without providing much direction. Utlimately the concentration risk was too high and they wanted us to take up a commercial loan seeing as it was a 'development'. This brings us to early 2020.

As we couldn't afford a commercial loan to build all 4 units together (we wanted to split it clean between 4 owners as well), we approached another broker who said it could be done and they've compeleted a similar scenario previously. 10 months down the track after huge delays with getting conditional approvals (COVID, bank processing/waiting times, etc.) from seperate banks (to reduce the concentration risk), we are the same position where CBA credit variation team has declined our consent to subdivide citing is against their internal policy. The other banks who will take over each subdivided lot (including the construction loan) has (to our knowledge) provided the intent to have our mortgage from CBA discharged once the land has been subdivided however CBA feels that this is still a risk.

Anyone else come across this before or anyone have any advice? We've gone back to the surveyor (to surrender the easement) however they reccommended us to a property lawyer who came up with a plan for us however there isn't a guarentee that it will work. We don't want to end up in the same position after jumping through the legal hurdles only for CBA to knock us back down again.

 

Can you refi as is to a lender who is fine with a 4 pack? And get their consent to subdivide?

 

We did asd the question to one of the banks who we have conditional approval for, they came back pretty quick and said no.

We could ask other banks but we could be led down to another endless track given it took us months to get conditional approval..

 

So how far along are you? You have WAPC conditional approval for subdivision or you have already met the conditions on the WAPC approval (ie new services etc) and you now just want CBA to release the title so it can become 4 titles?

Have you done a deed of partition allowing the lots to then be transferred into single names each ?

 

Why do you need consent? Cant you just subdivide without telling them?

 

How would that even be possible when CBA are the mortgagee with the title

 

You have 2 choices
a) convert the loans to commercial loans with CBA
b) refinance the whole property to another lender then subdivide, then potentially split the loans between different lenders

without a house the LVR is probably an unacceptable level. How were you going to fund the construction?

 

This is where private money lenders at high interest come in handy. It sounds like you need a loan for those few months while council approves the DA so that you can refinance after subdivision approval. A private lender will charge you about 1% per month for such a loan. You will find one through a lawyer that works with developers in your area.

 

Thanks everyone for your responses. After another 3 months, we finally had CBA consent to subdividing into 4 and have our titles, all with 4 owners on each title. Resubmitted to remove the easement which took no lore than 3 weeks in total. All it took was a revised strata survey via the surveyor and a resubmission to Landgate. Conditions are in place however for us to refinance out of the CBA all at the same time but we’ve hit another hurdle.

Our broker recommended we went with different banks to reduce the concentration risk for the development of all 4 units. That was the case until somewhere along the line he thought it was easier to go with 1 single bank. Since each bank was asking for unconditional approval with each other, it was a chicken and and egg thing going on. This whole process took approx 9 months and finally when we went to get unconditional approval, the same thing came up again. Refused due to common driveway. We’ve wasted our time again, what’s our options to get some sort of compensation for the useless advice and the trust we put into our broker and bank? They knew about the common driveway all along, it was cleared with their credit team and they had the drawings from the beginning.

 

first thing I would have done is work out the loan portions and separate into 4 separate loans with the existing lender with each loan secured by one title- uncross.

Then can refinance one at a time.

If the broker new about it and advised the bank what is the issue with them?

You can no right to demand a lender to lend to you, but if they had given full approval you could ask for some compensation - but what is your loss?

 

Sounds a bit little like a split contract with common driveway etc. sometimes trying to force a deal through as a residential loan can create more headache than the savings are worth.

Personally I would not have attempted this as a resi lend. I would have referred to a development specific broker who could offer bank and private money options.