RECONFIGURING 2 LOTS INTO 3 WITH NEIGHBOUR TITLE ISSUES

I own a 607m2 block and my neighbour owns the 607m2 block next to me. We have applied to reconfigure our lots into 3 x 405m2 lots (effectively creating 1 new lot in the middle).

My friend owns the left block, I own the right. My friend is building a home on the lot to the left which she will sell after it's built. I am building a home on the lot to the right for my family to live in. Together we will build a house in the middle and sell it.

Common sense told us that only one new lot and title would need to be created for the new middle lot. My friend's name would remain on the left lot, my name would remain on the right lot and both our names would be on the lot in the middle.

The surveyor just sent us through the survey plan, and a form to sign as the registered owners, noting "Cancelling Lots 85 &22". He said this basically means that it will be classified as 3 new lots and both our names attached to all three titles. We don't want this because, I will be living in mine as my family home and my friend will be selling hers privately. We only want both our names on the middle lot which we intend to build on as a joint project and sell.

We are also concerned that this will mean more fees etc if they are considered as 3 new lots, instead of two existing lots and 1 new lot.

What is the norm on this?

Thanks

 

You might need a deed of partition. Or just take one title each and do tenants in common for the middle lot you will both sell

 

You need legal advice on
- CGT
- stamp duty
- GST
- Estate Planning
- Asset Protection

 

Deed of partition to formalise the breakup and retention of lots, plan of consolidation and plan of subdivision.

New lot numbers.

 

Your surveyor and your property lawyer should be able to walk you through this.
Basically they need to amalgamate the 2 original lots into 1 parcel of which you will both be joint owners of so that the size meets the requirements to split up again. Then it will be split up into 3 lots of which you will be joint owners. The amalgamation and split can be done simultaneously in most states. Your property lawyer can then transfer half of lot 1 and half of lot 3 to each other - basically you give each other half of the lots you want 100% in your names.
The "giving" of the lots creates a CGT and transfer duty event but if done well there should be minimal payments if the value of the lots are the same.
It's a bit complicated but you need to understand the ramifications and processes now and get good advice so you understand the additional layers and what additional fees/payments are likely to happen.
From a tax point of view you will need to also talk to your accountant about CGT, GST now as well so you understand that the new house will be subject to GST when you sell it and work out if there is GST on the transfer of vacant land to each other.

 

@Westminster - I am a man of few words.

 

Thats a good summary Westminster.

The deed of partition will mean that even though you would be both joint legal owners of a block each of you is beneficial owner of your original portion of the block and the other legal owner is trustee of you for this share. That way when they are split again the beneficial ownership of that portion is not changing and therefore no CGT or stamp duty - but if you end up with more than you originally owned there would be, but this would be only on the extra portion.

 

Thanks Everyone. This development kind of fell in our laps, so we are novices trying to wade our way through the process.

 

In addition to the partition, you should also consider a development agreement to dictate what happens with the development of the middle block. At worst, some form of written agreement.

You will also need to consider getting mortgagee consent to the partition and subdivision if that's the way you go.

 

Unfortunately not. The main difference is that the property is currently held in one name only which means a transfer to another name will trigger CGT/transfer duty. A partition assists when property is held in two names and you each want to take part of the land.