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What is a Subdivision in Real Estate?

By J. Beam
Updated May 16, 2024
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A subdivision is a concept most people in North America are familiar with because they live in one. Subdivision refers to the act of dividing large areas of land into areas that are easier to develop and subsequently sell as well as to the completed area itself. A housing subdivision is also commonly known as a plat.

The subdivision as we know it today first got underway in 1926, when the Advisory Committee on City Planning and Zoning formed the Standard City Planning Enabling Act (SCPEA). The SCPEA was responsible for defining subdivisions and organizing the plans that have since created many of the cities and townships we live in today. The SCPEA defines “subdivision” as any plot or parcel of land that is divided into two or more plots or parcels for the purpose of sale and/or development.

After the SCPEA was created, towns, cities, and communities began to develop in record numbers. Rural areas began to be developed to include several houses on individual lots. The creation of subdivisions increased the housing capacity in the United States and gave people a chance to form communities away from major downtown areas, but stay closely connected. Today, these communities are our suburbs.

For a new subdivision to be created, a developer must apply for zoning permits to the city or township where available land is located. Zoning laws determine whether the development will be single family dwellings or multi-family dwellings, how many residences can be placed on the parcel, and how public utilities will be incorporated.

Many semi-rural areas are currently being examined for their subdivision potential. As older suburbs and cities become over developed and crowded, people look to move further away from the hustle and bustle. However, many people view rural living as an inconvenience because they are located far away from retailers and service providers. To meet this demand, developers seek out large areas of land to divide and develop into a new subdivision.

The typical new subdivision consists of two or more connecting streets, which each contain several houses sitting upon small lots. The current trend in new home construction is large spacious homes that often contain large-scale rooms that serve more than one purpose – such as the great room. Lot sizes vary and its still possible to buy in a subdivision with ½ acre lots. As the US population continues to grow, we are likely to see a continuance of subdivisions popping up in semi-rural areas and the tradition of the typical American neighborhood will live on.

What Is a Subdivision in Real Estate?

If you’re still wondering “What is a subdivision in real estate?” the short answer is that it is a parcel of land that can be further split into smaller subunits. These subunits are known as lots. A subdivision is typically purchased by a developer who then divides it into lots and builds on them. Or, the developer may sell the lots to individual builders so they can build on the lots. It is also possible for an individual to buy and learn how to develop land for a subdivision, though the process can be expensive, stressful and time-consuming.

Usually, home buyers like to get an idea of the way a subdivision looks and feels before they decide whether to buy a lot or home within it. Some subdivisions have a homeowners association and some do not. An HOA is a membership organization that helps to enforce covenants and preserve a development’s appearance. AN HOA may own and maintain sidewalks, common green areas, and streets within its jurisdiction.

How To Develop Land for a Subdivision

Are you ready to find out how to develop land for a subdivision? Here’s how the process should generally go. Keep in mind that there are always a few exceptions to any process, but these are typically the steps any subdivision developer should plan to take:

Step 1: Get a Land Survey

A land survey is essential before developing land for a subdivision because it reveals the structures and boundaries of any property you want to develop. It can reveal if there are any overlapping boundaries shared with other properties, which is very important to know so you don’t run into legal trouble when developing a subdivision.

Step 2: Secure Permission From the Local Governing Body

Before you continue developing land for a subdivision, you need to get the appropriate permission from the local governing body. This means securing a contract and making sure you have a subdivision development proposal to show the local city council, land developer, or municipal politicians’ office. Your subdivision development proposal should include the layout, schematics and site plans for the proposed project.

Step 3: Make Sure You Follow Zoning Ordinances

Local zoning laws are very important to understand before developing land for a subdivision. Before you proceed, you must be absolutely certain that local zoning ordinances allow you to proceed with your subdivision project.

Step 4: Get the Necessary Permit

Once you’re certain that you’re following zoning regulations and have the proper approvals to move forward with your project, you need to get a building permit. This permit gives your development company the authority to access and change the land to build roads and get the property ready for the construction of homes or other buildings. Depending on the scope of your project, you may need to get a permit for every subdivision unit within the development. Once you have the permit you need, you should be able to begin construction within 60 days.

How To Find a Subdivision of Property

Now that you know the answer to the question, “What is a subdivision in real estate?” it’s time to figure out how to subdivide your property if you choose to do so. Here’s how to begin the process and how to find subdivision of property.

Contact Your Local Planning and Development Office

The first thing you’ll want to do when learning how to develop land for a subdivision is contact your local planning and development office. Since subdivision regulations and laws vary by location, this is the best way to ensure you understand how to legally subdivide your property.

Understand What It Means To Subdivide Property

If you want to increase the value of your land and bring in profit from it, subdividing it may be the answer. Before you pursue this option, make sure you understand what it really means to subdivide a property. You’ll need to divide your property into several parts, which means you have a smaller piece to yourself but will get a profit from the pieces you choose to sell.

Understand the Risks of Subdividing Property

There are risks associated with subdividing property if you don’t do your due diligence. Before you actually subdivide a piece of property, make sure you do the advance research and that your property is eligible for subdivision. Otherwise, you could waste a lot of money, time and effort trying to do something you are not allowed to do.

These are just a few of the steps you’ll want to take before subdividing a piece of property you own.

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Discussion Comments
By vigilant — On Sep 26, 2012
I have no problem with subdivisions in principle, but I have been alarmed to see how many of them are gated these days.

Do we really want to be cut off from everyone else?

People can live the way they want to live but I don't see why anyone would want to live behind walls.

By BAU79 — On Sep 25, 2012

@summing - My childhood was pretty similar and in general I think I feel the same way that you do.

But I have always hated how silly the names of most subdivisions sound. You could ramble of a list of 20 of them without even having to stop to think - Oakbrooke, Pine Meadow, Glen Lawn. There seems to be a total lack of imagination applied to this part of the development phase.

By summing — On Sep 25, 2012

I have lived in subdivisions pretty much my entire life. My family moved around to a few of them. Then I went off to college. And just a few years after college I ended up buying a house in a subdivision.

I didn't plan it that way, I just ended up getting a great deal on the house. I have nothing against subdivisions as long as they are done well.

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