Yesterday a neighbor approached me about buying a portion of my city lot so that he can build a garage. Fine by me, less to mow. But where do I even begin? I’ve spoken to a realtor who confirmed the boundary lines (basically the neighbor wants to extend his a few dozen feet west), and he stated that I’d need a surveyor to divvy things up.
So, is this a situation where I pay the surveyor or does the potential buyer? It’s looking like a survey will cost a least a grand, and I’m unlikely to get more than $5k for the land I’m selling him, so it seems like having me pay for the survey kind of blows. In situations like this, does the buyer customarily pay for the survey?
Once I have that, then what? Do I still need a realtor to dot all of the i’s and cross all of the t’s? His or her commission in this transaction is likely to be less than $1,000, is it even worth it to them?
From things I have learned at zoning board of appeals hearings: You will need to check with the city to make sure you are not creating a non conforming lot. The neighbor’s land will probably need to be added to his existing lot to make one larger lot as many cities will not allow just a garage on a lot. Your smaller lot will have reduced taxes.
It seems to me that if the neighbor wants this, then they can pay for everything, including the survey.
They should be extremely grateful that you are even considering the offer. Most people with a typical city lot would simply decline to subdivide and sell part of their lot.
I would also make very sure that going through with this doesn’t adversely affect your lot so far as required setbacks and the like, for any structures currently on the lot as well as any you might contemplate installing in the future. That also goes for driveways, sidewalks, landscaping, trees, etc.
Or that doing this doesn’t make your lot dramatically decline in value (i.e. more than you are getting from the neighbor), or make your lot smaller than the minimum for the city for a buildable lot. You’d presumably be grandfathered, but might not be able to remodel or rebuild in case of a loss.
Presumably there was a reason the lots were drawn the way they were for you and your neighbor.
You’ll want to check to see if municipal approval for property splits and lot line adjustments are required in your state. Here in Michigan they are. The purpose of this is to ensure that folks don’t create nonconforming lots that can’t be developed. Your community likely has minimum lot sizes and lot widths as well as minimum required setback distances from property lines for buildings that need to be maintained. Usually, communities that review these sorts of land divisions have application forms and their own set of required information that must be submitted.
Most often purchasers pay for the survey, although 50/50 isn’t uncommon either.
The realtor isn’t the one who wants a garage, and realtors don’t set prices.
This is a much different situation than your typical real estate transaction. As far as your neighbor is concerned, you’re the only game in town, and it comes down to how badly they want a garage.
As potentially lucrative as this sounds, I need a starting point for negotiations, so I asked the realtor about lot prices in my (dirt poor, rural) town, and he said not to expect more than about $5k. That’s where I got that number.
100% of the expense and hassle belong on the buyer in this instance. Once the buyer has spent enough money on surveys, government permits, lawyers, etc. to know who much this will cost them, they’ll decide how badly they want to keep spending money to perform the subdivision and pay you whatever king’s ransom you can extort from them for their garage.
Or they’ll decide they don’t need it that badly.
But that’s the framework you should have in mind for the division of labor and division of expenses. IOW: all on them, period.
My bet is that real quickly your neighbor will decide that actually doing it all legal-like is too rich for their blood.
Others have covered all the potential pitfalls of the work itself. I’ve got nothing to add there.
You have lots of leverage in this transaction. The neighbor is at your mercy. You set the price for what you are selling. The buyer takes your price (or declines if it’s too high)
A land surveyor will be required to establish the new boundaries. As part of that process the surveyor should do the work of determining if the changes will violate any city rules or codes. Ultimately the new boundaries will be recorded with the government agency that is in charge of property boundaries. This could be the county, borough, or some other level.
This changes the discussion considerably: real estate prices are very high in many cities and there are all kinds of complicated building and zoning regulations there. The situation is quite different in dirt poor, rural towns. Perhaps some of the previous posters might want to revise their comments to reflect this.
It’s good to have a figure in mind in advance. But I’d still let the neighbor make the first offer. Then tell them you are going to think about it. You are pretty much holding all the cards here.
Frankly the neighbor should expect to pay above market rate just for the inconvenience to you and the fact that you are the only game in town. (As opposed to an eminent domain type of situation, where all you get by law is market rate.)
And do make sure you follow all the advice about nonconforming lots, a smaller than average lot, setbacks, etc. This is one of those situations where a mistake here could cost you much, much more than whatever you get from the neighbor (potentially the whole value of your property). And once it’s done, you can’t undo it.
Personally, I’d consult with a real estate attorney. I’d ask the neighbor to pay for that consultation too.
If you tell us the name of this dirt poor rural town, we may be able to look it up online and see if the town has it’s zoning and/or land development regs posted online. I understand about wanting to maintain anonymity here, so you should know that many communities post their ordinances online nowadays - even rural communities.
I think what I’m going to do is tell him to hire a realtor, have the realtor contact me, and we’ll go from there. His realtor can arrange the survey, make sure everything is hunky dory with the town, etc.
Be careful. If he hires a realtor, typically the realtor is bound to (not just apt to but required to) represent his interests and not yours. If you tell the realtor things like “I might accept less” he’d be ethically required to report this to the buyer.