Jointly owned buildable land presents unique opportunities and challenges in dissolution proceedings. The land’s development potential often represents its primary value, making the assessment of building rights central to the entire process.
The Value is in the Rights, Not Just the Land
A plot of land zoned for construction is valued primarily by what can be built on it. Building rights – the permitted floor area, height, use type, setback requirements – determine the land’s development potential and thus its market value. Disagreements about how to value these rights are at the heart of most buildable land disputes.
Physical Division by Subdivision (Parcelization)
Unlike most apartment buildings, a plot of land can often be physically divided by subdividing it into separate parcels, each allocated to one partner. This requires surveying, planning approval, and registration of new separate parcels.
Physical division by parcelization is the preferred outcome when it is feasible, as it gives each partner full independent ownership of their portion.
When Division is Not Possible
Not all buildable plots can be divided. Minimum plot sizes required by zoning regulations, building configurations that only make sense on the full plot, or access and infrastructure constraints may prevent division. In these cases, sale or buyout are the dissolution options.
Development Partnerships as an Alternative
Rather than dissolving the partnership by sale, the partners might consider developing the land together or with a developer, and dividing the completed apartments. This approach can maximize the value available to both partners but requires continued cooperation during the development period.
Timing and Market Considerations
Buildable land values can change significantly based on planning decisions and market conditions. Timing the dissolution to capture maximum value – whether that means waiting for a rezoning to take effect or selling before a market downturn – requires strategic thinking alongside legal expertise.
