Severing your lot? Get advice, chop-chop!

Helen Morris, National Post ·

If you moved into your neighbourhood a number of years ago, perhaps when new houses were still being built, you may have bought a double lot. Maybe the idea was eventually to build a second home.

However, if you have decided to split your double lot and sell off the vacant half, there are mortgage, planning and property tax issues to consider, which can be lengthy and costly.

"It's one of those areas that can be very tricky," says Ray Leclair, real estate lawyer and vice-president, Title Plus at Law Pro in Toronto. To sever a lot, you will need to know if, legally, it is a double or two single lots, get permission from the City, as well as get your mortgage provider to agree to your newly reduced property size.

"It would affect the total value of their asset that you've got the mortgage on," says Al Roberts, a broker with Mortgage Intelligence in Unionville. "If they sever the double lot, then you may have to proportionally reduce the mortgage to the new value of the reduced amount of land."

The lender may require you to pay the mortgage down by "x" amount of dollars before allowing you to sell part of the asset. A mortgage provider may also demand a new appraisal.

Unlike when you sell a home, you will need to get permission from the municipality to split a lot.

"A person can make an application to the committee of adjustment and ask that a piece of land be severed," says Joe D'Abramo, acting director zoning and environmental planning, City of Toronto. "We would look at the pattern of lot development in that area. This is a fundamental part of city development, the nature of lot size and creation."

Each neighbourhood has its own style and feel, and part of this is down to the size of the lots.

"People view and value their neighbourhood by the width of the lot," says Mr. D'Abramo.

Mr. Leclair says approaching your neighbours ahead of time can often defuse potential conflicts over a severance or planning application.

"People within 200 feet of the application site will receive written notice. The community comes out to the committee meeting and they'll voice their opinion and it can get very heated at times," Mr. Leclair says. "I've seen situations where it's neighbour against neighbour down at the committee."

The planners want to ensure that each lot and home fits with the overall character of the neighbourhood. The city must also consider provision of services to the new lot and the committee tends to grant the size of lot that is compatible or comparable to the pattern of lots in that area.

"Even if you have severed the land, the zoning still remains, so whatever the zoning says in terms of use permission will then apply to that new lot," Mr. D'Abramo says. "It's likely that if you created the new lot through the committee of adjustment, and it is of an appropriate size, that the zoning would allow for the construction of a home." The new owner would need a building permit and must meet the regulations of the zoning to build a home.

Once the severance and sale of land has been registered with the land registry office, it is time for your property taxes to be reassessed.

"MPAC adjusts the site areas and current values of the affected parcels in accordance [with the] information provided by the land registry office," says Joe Regina, account manager, Municipal Property Assessment Corp. in Toronto. "[Every four years], MPAC analyzes all registered real estate sales transactions and associated property-specific information in a community to determine current value."