Advantages of subdivision deed
It is very important for property developers to pay attention not only to the design and construction, but also to the legal aspects of a project. A substantively sound subdivision deed can offer significant benefits. Below I discuss some of the reasons why property developers should strive for a well-drafted subdivision deed when dividing land into apartment rights.
1. Clarity and certainty
A detailed subdivision deed provides clarity on the rights and obligations of each apartment owner. This prevents possible disputes in the future and gives security to both the developer and the buyers. Getting all legal aspects right from the start lays the foundation for smooth and transparent cooperation between all parties involved. The developer can transfer the apartment rights to the buyers with peace of mind, without having to fear discussions about the rules incorporated in the subdivision deed.
2. Protection of investments
Property developers invest significant resources in developing real estate projects. A well-designed subdivision deed provides protection for these investments by properly recording the developer's interests. All the more so if the developer himself also remains entitled to one or more apartment rights and thus remains a member of the VvE. In this way, the developer can maintain control over the division of maintenance and management costs between the individual owners. The subdivision deed can protect against circumstances that the developer did not foresee in advance and ensures that the developer retains control over certain aspects of the project even after the apartments are sold.
3. Management and maintenance
An effective subdivision deed not only regulates the initial division of space, but also clearly defines how the management and maintenance of the entire complex will be carried out by the CoE. This includes issues such as the management of common areas, rules for carrying out repairs and the distribution of maintenance costs. A well-structured subdivision deed prevents misunderstandings. Avoiding ambiguity in this regard can reduce disputes and improve the efficiency of financial management, preventing the joint owners from incurring unnecessary costs for this purpose.
4. Flexibility for future adjustments
The needs of a community can change over time. A subdivision deed that allows for modifications and expansions, if in compliance with applicable laws and regulations, gives the developer more flexibility. This makes the developer more responsive to changing market conditions. Especially in the context of energy transition, this is highly desirable.
5. Market value and marketability
A well-drafted subdivision deed can increase the market value of individual apartments and the entire complex. Potential buyers value transparency and certainty, and a solid legal basis contributes to buyer confidence. This not only increases the marketability of the apartments, but can also have a positive effect on the price per square meter.
6. Better financing options
A strategically designed subdivision deed can facilitate project financing. Financial institutions value a solid legal foundation when lending for real estate developments. A well-drafted deed can reduce risk and increase lender confidence, which can provide favorable financing terms for the developer.
In a nutshell
For project developers, drafting a substantively sound subdivision deed is of great value. It provides the legal basis for the success of the project. Clarity, protection of investments, efficient management, flexibility and increased market value are some of the benefits that a well thought-out subdivision deed brings.
Drafting subdivision deed
It is essential for developers to work with experienced legal professionals who are familiar with multiple land use rules and specialize in apartment law in particular.
Therefore, in practice, a lawyer who draws up or reviews the draft subdivision deed whether or not in cooperation with a notary is increasingly used. Ultimately, it is the notary who finalizes and passes the division deed. It is precisely the approach from both disciplines that ensures the best possible design of the division deed.
