Real Estate – The Difference between Subdivision and Urban Development

Although "subdivision" (subdivisión) and "urban development" (fraccionamiento) appear to be similar terms, from a Mexican legal standpoint, they are different. According to the General Law of Human Settlements (Ley General de Asentamientos Humanos), Mexican states have the authority to legislate in the area of human settlements and urban developments. Consequently, differences between both concepts should be reviewed according to the local laws on urban development. Nevertheless, the following provides some of the principal differences generally accepted in local laws. Subdivision implies the partition of property into two or more sections, with each of the sections having access to public roads. Each of the subdivided lots must comply with the minimum surface area established by the urban development plans applicable to such location. Depending on local law, the subdivision of real property may trigger the obligation to relinquish or pay for municipal land areas, while some legal ordinances allow for the deferment of this obligation. In subdivisions, there may be a need for infrastructure for utility services that may be fulfilled by works performed by the particular entity or individual requesting the subdivision. As a general rule, the requirements and response times to obtain an authorization for a subdivision are shorter than those applicable to urban developments. An urban development implies a division of property which requires the establishment of public access roads, in addition to the establishment of infrastructure for utility services (water, gas, sewage, electricity, paving, etc.). In this case, developers must assign or donate land to the municipalities and utility entities in order for such municipalities and utility entities to provide their respective services to owners of the lots resulting from the urban development project. Various types of urban developments exist, including residential, industrial, commercial or mixed purposes. Each type of urban development has different specific requirements that apply to it, according to local laws, including those related to the establishment of green and recreational areas which, as a general rule, must be assigned or donated to the municipality. The procedure to authorize an urban development entails compliance with significant requirements, such as road surveys, public comment, the obligation to construct infrastructure improvements for utility services, as well as compliance with particular legal requirements in accordance with the local official urban development plan. When analyzing the acquisition of real property, it is important to consider these differences in the due diligence process, in addition to determining the condition and availability of utility infrastructure and compliance with all legal requirements that apply to land use and the type of development.

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